Scottish Watch, a Dumfries-based group, is using informants to draw up an 'ethnic map' of Scotland 'to determine the extent of English imperialism'.
Activists plan to lobby Scottish economic and cultural organisations to replace English employees with Scots. If the organisations fail to do so, they say, they will take non-violent action against them.
Speaking after the inaugural conference of Scottish Watch in Perth, Iain Sutherland, national treasurer, denied that the campaign was racist. 'We are freedom fighters, just like any of the other liberation movements which have fought English imperialism in the colonies over the years,' he said.
Mr Sutherland, aged 38, a college lecturer and author of a book on 'tartan terrorism', said that Scottish Watch 'fills a gap in the political process'.
'None of the major parties will address the problem of English influence. They are terrified it will lose them votes. But people are suffering because of the English influx. The incomers are pricing natives out of the local housing and jobs market and are taking senior posts in cultural organisations, which threatens our heritage. We have got to reclaim it.'
Leaflets claim that more than half the inhabitants of Sanday in Orkney and the Isle of Arran are English. 'There is a real danger that if we do not take action now, we will find that in 20 or 50 years' time, Scots will be a minority in their own land.'
Mr Sutherland and other members of the Scottish NationalParty, exasperated by what they describe as its failure to consider 'the English question' following its poor performance in the last general election, resigned earlier this year to form Scottish Watch. The group claims 137 members.
Grampian police are investigating possible links between ultra-nationalists and letter- bomb attacks earlier this year in Aberdeen, Edinburgh, Dundee, and East Anglia. Mr Sutherland said the Scottish Watch 'ethnic map' would be published next year when the fight against Englishness would 'begin in earnest'.
The number of English people living in Scotland is not known. But government figures show that almost 800,000 English people moved to Scotland between 1976 and 1991. In the same period 1.2 million people - most of them Scots - left the country.
The prospect of a concerted campaign against English residents north of the border prompted condemnation across the political spectrum in Scotland yesterday. Margaret Ewing, Scottish Nationalist MP for Moray, said: 'If these people are members of the SNP, they should be expelled. They are doing the general cause of Scottish nationalism no favours whatsoever.'
Bill Walker, Conservative MP for Tayside North, said: 'This is the kind of ethnic cleansing that has produced the problems that we see in former Yugoslavia. Narrow nationalism of that kind is the worst form of political order. Wherever it exists, it ends in bloodshed.'
Brian Wilson, Labour MP for Cunninghame North, described Scottish Watch as 'unpleasant nonsense'.