Angela Merkel shuffles Germany's intelligence chief out amid anti-migrant demonstrations

Germany's government said on Tuesday it would replace the head of its domestic intelligence agency who has faced accusations of harbouring far-right sympathies, putting an end to a dispute that exposed divisions in Chancellor Angela Merkel's government.

Merkel's office released a short statement Tuesday saying the head of Germany's BfV spy agency, Hans-Georg Maassen, will be moved to a new position within the Interior Ministry.

The decision, which follows three-way talks between Merkel and the heads of two other parties in her governing coalition, is a defeat for conservatives in her Union bloc.

The centre-left Social Democrats and some in Merkel's Christian Democratic Union party had been calling for Maassen to be fired for playing down recent far-right violence in the eastern city of Chemnitz.

Horst Seehofer, leader of Merkel's Bavaria allies the Christian Social Union and the country's interior minister, had stood behind Maassen.

"Interior Minister Horst Seehofer values [Maassen's] competence in the questions of public security," the government statement said. "Mr Maassen will not be in charge for supervising the BfV at the ministry."

Denies ties to far-right party

Maassen questioned the authenticity of video footage of far-right protesters chasing migrants in the streets of Chemnitz.

In office since 2012, Maassen has also been criticized for alleged improper contacts with members of the anti-migrant Alternative for Germany, which he denies.

The Maassen row has exposed deep divisions in German society over Merkel's 2015 decision to open the country's borders to refugees fleeing wars in Syria and elsewhere. More than one million have come since then.

The recent fatal stabbing of a Cuban-German man in Chemnitz has exacerbated tensions, with violent protests ensuing in the eastern city.

A German court on Tuesday released an Iraqi asylum seeker detained since last month in the case, his lawyer and a prosecutor said.

A Syrian man who was also detained over the stabbing of the man remains in custody, the prosecutor said.

A third suspect is still on the run in connection with the killing of the 35-year-old carpenter identified only as Daniel H.

The decision to not outright remove Maassen from government is likely to cause debate.

"Maassen is no longer the top spy. This is good. But it is a farce that he is practically being promoted and that the SPD is going along with this," said Dietmar Bartsch of the hard-left Die Linke party. "This government has reached its end. It is an emergency government of the election losers."

Merkel has been criticized for taking 11 days to act on Maassen, whose comments on the far-right violence in Chemnitz during an interview withBild newspaper on Sept. 7 triggered the dispute.

With files from The Associated Press