FRANKFURT, West Germany (AP) _ The leader of an outlawed neo-Nazi group said Friday he has formed a new one to pursue his political goals, although the banning order prohibits him from forming successor organizations.

His goals include expelling foreign workers and people who have sought asylum in West Germany.

''Right after the banning of the Nationale Sammlung, I formed a new organization with the name Initiative Volkswille (Popular Will Initiative),'' Michael Kuehnen said. ''I want to keep being politically active.''

Kuehnen said he hoped to run candidates in municipal elections in North Rhine-Westphalia state this autumn.

In Bonn, Interior Ministry spokesman Michael-Andreas Butz said Thursday's ban of the Nationale Sammlung a was a success and noted that the order would keep the party out of city elections in Frankfurt and Langen next month. There was no official to Kuehnen's announcement that he had formed a new group.

Nationale Sammlung had entered candidates in the Frankfurt and Langen elections. Its platform included renaming a railway station after Adolf Hitler.

An appeals court ruled Friday that the radical right-wing German National Democratic Party may hold a two-day rally this weekend at Rahden.

Officials in Rahden, about 35 miles south of Bremen, said they had forbidden the rally because they feared violence. A court in Minden rejected the ban and the appeals court in Muenster agreed.

More than 1,000 people are expected to attend the annual rally of the party, which seeks the expulsion of foreigners to maintain a ''national German identity.''

Kuehnen, who has spent more than seven years in prison for his neo-Nazi activities, spoke to reporters outside a Munich court, where he was fined $490 for holding an illegal rally there in the Bavarian capital in May.

He said most members of his new group belonged to Nationale Sammlung. and ''We want to do away with the system.''

Police raided homes of Nationale Sammlung members, confiscating guns, knives, ammunition and Nazi propaganda.

''The Gruesome Dreams of Neo-Nazi Kuehnen,'' said a headline in the mass- circulation newspaper Bild.

It quoted Kuehnen as saying Hitler ''is for me the greatest German in our history. We're continuing what he wanted.''

The crackdown on Kuehnen's 170-member group came as West Germans warily eye a possible resurgence of right-wing extremism.

Opposition Social Democrats in the Parliament scheduled a hearing Wednesday to discuss the Republican Party, another extreme right-wing group that made a strong showing in West Berlin elections last month.

The Social Democrats want to question domestic intelligence experts about what they know about the party, headed by former Nazi Waffen SS soldier Franz Schoenhuber.

Social Democrats have long argued that official government figures fail to take account of all extreme-rightist tendencies. The number of such extremists is now estimated at 28,300 nationwide, with more than 1,500 classified as neo- Nazis.

In founding the Nationale Sammlung last summer, Kuehnen and his followers wrote: ''We must create a national-revolutionary and social-revolution ary alternative. We must make protest-voters aware of this alternative.''

The federal government cited that statement to justify its argument the Nationale Sammlung was attacking West Germany's democratic system and should be banned.