German Chancellor Gerhard Schroeder has cancelled a planned vacation in Italy in the wake of anti-German remarks by a senior Italian official. The German government says the chancellor and his family will instead spend their summer vacation in Mr. Schroeder's hometown of Hannover.

It is the latest episode in a continuing spat between Germany and Italy that began last week when Italian Prime Minister Silvio Berlusconi suggested that a German member of the European Parliament should play a Nazi concentration camp guard in an Italian film.

Mr. Berlusconi later expressed his regrets to Mr. Schroeder without formally apologizing for his remarks.

But that was before an outburst by Italy's top tourism official, Stefano Stefani, who, in a letter to a right-wing Italian newspaper, called German tourists hyper-nationalistic blondes who arrogantly invade Italian beaches every summer. Mr. Stefani has refused to apologize.

That prompted two top German government ministers to demand that Mr. Stefani be fired. The mass circulation German tabloid, Bild, urged Mr. Schroeder, who frequently goes on vacation in Italy, to cancel his plans to visit the country this year, as he had threatened to do when Mr. Stefani's remarks first appeared last Friday.

On Wednesday, Mr. Schroeder's spokesman said the ongoing controversy between the two countries would make it difficult for the Schroeder family to have a quiet and restful vacation in Italy. So, he added, they will spend their vacation at home.

Asked by Italian reporters about Mr. Schroeder's decision, Mr. Berlusconi said, I'm sorry for him.

Nearly eight million German tourists visited Italy last year. German Interior Minister Otto Schilly, who owns a house in Italy and plans to spend his own summer vacation there, warned Italy that German tourists just might decide to take their vacations elsewhere as a result of what he described as Mr. Stefani's obscene remarks.

Although the governments of both countries have tried to smooth over the dispute, surveys conducted by German newspapers indicate that Germans are growing angry about Mr. Berlusconi's Nazi slur and Mr. Stefani's anti-German tirade. One poll says 14 percent of those surveyed are so furious that they have vowed to boycott Italian restaurants.

Even more worrying for the Italians was a warning by travel firms in both countries that the $9.6 billion a year that German tourists spend in Italy may be in jeopardy. Local tourism officials across Italy are writing letters to German newspapers assuring the Germans that they and their money are more than welcome in Italy.