The party was launched in Jerusalem on Saturday night.
Taking part in the ceremony were many leaders of the officially outlawed but effectively tolerated Kach group such as Baruch Marzel and Hen Ben Elyahu.
Kach is a violent Jewish militia made up of Jewish activists who reject democracy and advocate the expulsion or, if necessary, annihilation of Arabs from what they call Eretz Yisrael (Land of Israel).
According to some Jewish religious authorities, Eretz Yisrael encompasses mandatory Palestine, Jordan, Syria, Lebanon, Cyprus, and parts of Saudi Arabia, Iraq and Turkey.
Since the outbreak of the second Palestinian intifada or uprising four years ago, Kach terrorists have killed scores of Arab civilians.
Those caught by the Israeli authorities usually received symbolic or light prison sentences. The bulk of the perpetrators are allowed to remain at large.
According to Ben Elyaho, a co-founder of the new party, the expulsion of non-Jews from Israel would "resolve all of Israel's political, economic and social problems".
"Our party calls for cleansing the region extending from the River Jordan to the Mediterranean from the Goyem [derogatory for non-Jews] and thus guaranteeing a Jewish majority of no less than 90% throughout the Land of Israel," he said.
Muslims were massacred at the
Ibrahimi mosque by extremists
Most of the founders of the new party are affiliated with Kach and other similar groups.
Another prominent co-founder is Baruch Marzel, a colleague of Baruch Goldstein who in 1994 murdered 29 Arab worshipers who were praying at the Ibrahimi mosque in central Hebron.
Following Goldstein's death at the hands of Arab survivors, Marzel and his fellow Kach activists eulogised him as a great "saint of the Torah".
Moreover, Marzel and his friends erected a memorial plaque made up of fine marble in the settlement of Kiryat Araba near Hebron "to immortalise" Goldstein's memory.
Eventually, the Israeli government of Ehud Barak, under pressure from the Meretz party, partially erased the structure in Kiryat Araba.
Kach was originally founded in the mid-1970s by Meir Kahana, an American rabbi, who preached that Judaism and democracy were incompatible and that Israel would have to choose either Judaism or democracy, but not both.
Kahana, who eventually became a member of the Israeli parliament, the Knesset, called for the expulsion of all Arabs from Israel.
Kach itself does not command widespread support in Israel. However, with Israeli society as a whole drifting to the right especially since the election of Ariel Sharon as prime minister more than three years ago, the movement has come to enjoy an influence far exceeding its actual size.
According to Professor Era Sharkansky of the Hebrew University of Jerusalem, Kach is trying to exploit the growing rightist opposition to the proposed Israeli withdrawal from the Gaza Strip to increase its following.
"Those people will not accept anything, they are against any settlement with the Palestinians involving territorial concessions. And they will threaten civil war in order to thwart Sharon's disengagement plan."
Professor Era Sharkansky, Hebrew University of Jerusalem
"Those people will not accept anything, they are against any settlement with the Palestinians involving territorial concessions. And they will threaten civil war in order to thwart Sharon's disengagement plan," he said.
Sharkansky suggested to Aljazeera.net that the current political environment in Israel was increasingly conducive to the growth of Kach, in light of the near takeover of the Likud by right-wing extremists who oppose the planned withdrawal from Gaza, the dismantling of Jewish settlements and the creation of a Palestinian state in the West Bank.
Sharkansky argued that Sharon might be trying to circumvent or neutralise the rightist opposition to his plan by getting the US to accept his other plan to annex large parts of the West Bank, including such settlements as Ariel, Ma'ali Adomim and Gush Etzion.
This, Sharon hopes, would desensitise right-wing opposition to the Gaza plan, even though the annexation of the West Bank settlements may kill any chance for the creation of a viable Palestinian state in the West Bank.