The EU newcomer Estonia was accused of amorality and gross historical insensitivity yesterday after it allowed veterans of the Nazi Waffen-SS to parade through its capital Tallinn.

The event saw veterans of the 20th Estonian SS division attend a church service, lay flowers at a war memorial and attend a celebratory concert.

The planned unveiling of a memorial to Estonian SS troops was cancelled at the last minute, however, and is not now expected to take place until the autumn.

Jewish groups pointed out that Estonian volunteers in the SS were responsible for the almost complete annihilation of the country's Jewish population during the Second World War.

Tallinn City Council gave yesterday's event its blessing. It said that it was a "political matter" but, despite promises to the contrary, failed to provide an explanation of why it had agreed to the commemoration.

When asked to comment, Estonia's Ministry of Foreign Affairs said the matter was not within its competence, while a government spokesman who apparently specialises in the subject did not respond to inquiries. Officials said that anything concerning Estonia's SS fighters was "highly sensitive". Estonian SS units were formed in 1942 on the personal orders of Adolf Hitler, whose troops then occupied the tiny country. Their fighting prowess was said to have impressed the German Wehrmacht.

Organisers said the celebration was held to mark the 60th anniversary of battles fought by the Estonian SS against the Soviet army and to commemorate the 10th anniversary of the withdrawal of Russian troops from the country.

Many Estonians regard the SS veterans as freedom fighters who fought alongside the Germans to stave off Soviet occupation - the country was occupied by the Soviets before and after the war - and argue that they are military men rather than fascists. They see nothing shameful or controversial in such events and view external criticism as an attempt to blacken Estonia's name.

Government sources say that Estonia is a free country that respects freedom of assembly and that the country's history is not as black and white as it is often made out to be. Jewish groups strongly disagree.

Yevgeny Satanovsky, president of the Russian Jewish Congress, said: "The problem is that the SS is the same institution which had death squads. This meeting is absolutely amoral. They were members of a structure which was a structure of blood and death. Let their children look at their faces and see that there were rivers of [Jewish] blood in Estonia because of them."

Mr Satanovsky suggested that the country's apparently benign attitude towards SS veterans reflected ordinary Estonians' general indifference to the plight of the country's Jews. "Much of the population was absolutely neutral. They were not interested in the rivers of blood, in the extermination of their neighbours who they had lived with peacefully for hundreds of years or in the assassination of women and children.

"Very few of them hid Jewish children. [But] they were interested in getting new property."

Yesterday's event, organised by a group called the Union of Freedom Fighters which claims 3,000 members, is not unprecedented; similar events have been held 11 times since the country won its independence from the Soviet Union in 1991.

Earlier this year Jewish groups were similarly outraged when a statue to a colonel in the SS alleged to have the blood of thousands of Jews and Russians on his hands was erected in the north of the country. The unveiling of the statue - to Colonel Alfons Rebane - was attended by a member of the Estonian parliament and the government itself refused to condemn it, let alone insist on its destruction.

The way in which the Estonian SS veterans are treated by the authorities generates particular anger in the country's former imperial master Russia, which regards the elderly fighters as beyond the pale.

"Today Estonian fascists represent themselves as 'the noble fighters for the freedom of Estonia'. But the words 'the struggle for freedom' cannot stand near the swastika and the two horrible letters SS," said the Interfax news agency, which is closely connected to the Russian government.