Bernard Haycock, 60, got a seat on Bromyard and Winslow Town Council in Herefordshire last week through an electoral loophole. There are 18 seats on the council, but only 16 candidates, including Mr Haycock, put their names forward. He did not have to be elected.
Local MP Peter Temple-Morris, Labour member for Leominster, said: 'The BNP represents the worst of bigotry and racism in this country. It is sad Bromyard has to be the place that has inherited one of these men.'
Nick Griffin, the BNP's new leader, described the move as a 'first step on the ladder'. He said it was evidence the BNP is 'making progress towards the mainstream'.
He described the holocaust as the 'holohoax' and criticised as 'too soft' the revisionist historian David Irving, branded an anti-Semite, racist and pro-Nazi polemicist by a judge last week.
Mr Griffin, once editor of the now-defunct neo-Nazi magazine The Rune, is on a charm offensive, trying to remodel the party along the lines of Jorg Haider's Freedom Party in Austria.
The BNP's newspaper has been renamed the Voice of Freedom. Mr Griffin said: 'The asylum issue is helping.' Derek Beacon, the BNP's only other councillor, won a byelection in Tower Hamlets LBC in 1993, but lost the seat a year later.