The group, named Ungsvenskarna SDU, forms the Sweden Democrats' new youth wing, formed after the previous one was shut down by the party's head Jimmie Åkesson last month, following an internal rift.
But Ungsvenskarna (which translates as 'young Swedes') was the title used by the centre-right Moderate party's youth branch in the early twentieth century.
The Moderates' wing for young Swedes was set up in response to rising racism in Sweden. By contrast, the anti-immigration party has its roots in fascism, although it has entered the political mainstream in recent years.
“I think that MUF [the Moderate Youth] may have problems with this. But there will be some talk about this and that is positive for us,” Tobias Andersson, Chairman of Ungsvenskarna SDU, told the TT news agency.
The MUF's chairman Rasmus Törnblom reacted angrily to the decision.
“The Moderate party's youth league was formed under the name Ungsvenskarna 81 years ago as part of a powerful backlash against racism, Nazism, intolerance and collectivism,” he said, suggesting that the Sweden Democrats needed a history lesson.
He explained that the party was now looking at launching a legal challenge against the Sweden Democrats.
“First and foremost, we will fight against the Sweden Democrats' ideas, no matter what they are called. But we are looking of course into the conditions to legally challenge this,” Törnblom added.
The Sweden Democrats have seen a steady rise in support over the past year, taking them from 12.9 percent in the last general election in Sweden to 21.5 percent in one survey over the summer. But several polls published in September suggested that their momentum had stalled as Swedes instead rushed to demonstrate their support for refugees.