German anti-Islam movement PEGIDA looked in disarray on Wednesday, losing its second leader in a week when Kathrin Oertel, who took over after the founder quit for posing as Hitler, also resigned, and the group cancelled its next rally.

The Dresden-based group, whose weekly marches in the city have rattled the German political establishment, announced on its Facebook page that Oertel and another board member were stepping down, due to threats, hostility and media hounding.

Oertel, a 37-year-old mother-of-three became PEGIDA's national figurehead after founder Lutz Bachmann resigned a week ago on news that he was subject to official investigations.

PEGIDA said Oertel had quit "due to the massive hostility, threats and career disadvantages", adding: "Even the strongest of women has to take time out when at night photographers and other strange figures are sneaking around outside her house."

Another board member faced massive problems because his business had lost public contracts, PEGIDA said, adding its cause remained "good and just". German Chancellor Angela Merkel had warned people not to be manipulated by the group, cautioning some of its members have "hatred in their hearts".

Bachmann announced his resignation last Wednesday after the top-selling daily Bild carried a front-page photo of him with a Hitler moustache and haircut that he had posted on Facebook.

This, and reports that he had called refugees "scumbags", prompted prosecutors to investigate him for inciting hatred.

The 42-year-old convicted burglar put PEGIDA, which stands for Patriotic Europeans Against the Islamization of the West, onto the political agenda by leading weekly rallies in the eastern city of Dresden to defend what he calls "German" values.

PEGIDA saw its support shrink following the revelations about Bachmann, with protesters falling from a record 25,000 two weeks earlier — probably boosted by the Islamist militant attack on French satirical newspaper Charlie Hebdo — to 17,300.

PEGIDA marches and copycat events in other cities attracted thousands of people, but they were vastly outnumbered by tens of thousands of counter-demonstrators insisting Germany is a multi-cultural country that welcomes immigrants.

Oertel had told Reuters that PEGIDA "will go on" despite the departure of Bachmann, who said the Hitler photo was a joke. In a recent interview with Reuters, he described himself as an "impulsive" person.

PEGIDA's woes could also spell trouble for the eurosceptic Alternative for Germany (AfD) party, which has faced internal division after some of its members made overtures to the group.