Thilo Sarrazin has repeatedly criticised Muslim immigrants in Germany [AFP]

A board member of Germany's central bank has agreed to step down after he sparked outrage over remarks criticising Muslim immigrants and Jews.

Axel Weber, Bundesbank's president, said on Thursday that Thilo Sarrazin would be leaving his post at the end of the month after reaching an agreement with the bank.

Sarrazin said in a recently published book, called Germany Is Destroying Itself, that Muslim immigrants in Europe were unwilling or incapable of integrating into Western societies.

In an interview ahead of the book's release he also said that "all Jews share a particular gene".

"Given the public debate [about Sarrazin's book], the parties concerned are going, of mutual accord, to end their co-operation at the end of the month," the central bank's statement said.

'Out of context'

The book's publication led to calls for Sarrazin to be sacked, with several members of government, including Angela Merkel, the chancellor, indicating they would like the banker to go.

Jean-Claude Trichet, president of the European Central Bank, also said he was "appalled by the remarks".

The 65-year-old former Berlin state finance minister previously said that people were underestimating the effects of demographic changes, and that many of Germany's integration problems could be attributed to immigrants from Muslim countries.

He also caused controversy last year when he told a magazine: "I do not need to accept anyone who lives on handouts from a state that it rejects, is not adequately concerned about the education of their children and constantly produces new, little headscarf-clad girls."

The comments caused Weber to seek Sarrazin's removal at the time.

However the board member apologised for the remarks and had his duties at the bank cut back.

Sarrazin has insisted that his comments have been taken out of context and that his book, released on Monday, consists largely of what he called "well-documented analysis" that must be read before it can be criticised.

According to Britain's Guardian newspaper, Thursday's decision to remove Sarrazin is the first of its kind in the bank's 50-year history.

Sarrazin is also facing expulsion from the centre-left Social Democrats, who have started proceedings to remove him from their ranks.

Sigmar Gabriel, the party leader, described Sarrazin's comments as "linguistically violent".