John Stokoe, from Hetton, has been told to temper his display after complaints about items including SS flags and pictures of Adolf Hitler.

Chester-le-Street District Council, which runs the town centre Saturday outdoor market, took action after fears that the 46-year-old's stall would cause offence – particularly to people from ethnic groups persecuted by the Nazis.

Robert McMullem, town centre development manager, said: "We would love him to come and trade at Chester-le-Street, but we will not allow the display of Nazi memorabilia because some people are really offended by it.

"It is our policy to promote diverse living in Chester-le-Street, and to ensure people are treated with respect."

Mr McMullem said Mr Stokoe was told he was free to sell military collectables from all countries – including Germany – as long as it was not Nazi items or similar which could cause offence, but chose not to trade at all.

"That is most of the stuff I sell," said Mr Stokoe. "So there's no point being there without it."

Mr Stokoe said he had run the stall on and off for two years, and as far as he was aware there had only been one complaint – from a member of the council.

He said: "It's ridiculous what they have done. I think they are prejudiced against me. I'm absolutely furious about it."

Mr Stokoe said there was one SS flag and an armband with a swastika on it, among a stall full of items including medals, books DVDs and film programmes.

He added: "I know it's forbidden in Germany, but as far as I know it's legal to sell this stuff here.

"I thought this was a free country where you can sell what you want."

Mr Stokoe, who also trades on eBay, said he regularly attends military memorabilia fares, where large amounts of Nazi items of on offer and his stall trade has not attracted criticism before.

"I've spoken to hundreds of people about it, including lots of old soldiers," he said. "They have never had any complaints, and often stay and tell us stories."