Welcome to the BNP's summer rally: a day out of bouncy castles, bile and blind bigotry

Nick Griffin skips over a cow-pat and stares across the lush Ribble valley. "I have no problem with blacks or Asians," he says. "It's just that in 50 or 60 years we will be a minority in our own country. And minorities tend to have a rough time of it."

This is the cuddly face of Nick Griffin, the chairman of the British National Party, talking in a field that will buzz today with the sound of 800 supporters and their families enjoying the party's annual Red, White and Blue festival. There will be bouncy castles, a big top and burgers made with Best of British meat. But there will not be a single non-white face.

The festival, the third of its kind, is the biggest gathering the party has organised. Previous festivals, in Shropshire and Wales, were largely ignored by opposition groups and were policed by no more than a handful of police officers. But this event is being deliberately – some say provocatively – held in the BNP's Lancashire heartland, 10 miles from Burnley where, in May, three of its members were elected to the local council.

For Mr Griffin, a 43-year-old Cambridge law graduate, the attention is welcome. In 1999, he was elected to lead the party, and for the past three years he has been working to change its image. Gone – at least publicly – are the skinheads and swastika tattoos; in have come suits and friendly door-knocking campaigns.

After ousting John Tyndall, a man synonymous with the Nazi salute, Mr Griffin set about rebranding the party. Yesterday, in a field at Sawley near Clitheroe, he appeared friendly and affable. Whether he can be believed is a different matter. "The party was in a mess when I took over," he said. "We are now much better organised and, in white, working-class areas, we are saying the things the other parties are afraid to address. Every day, people feel more alienated in their own country over the allocation of local authority money, over asylum-seekers, over how lottery grants are spent on minorities. People no longer believe what the BBC and the Labour Party tell them.

"Our image is changing. I wrote in Identity, our magazine, recently, that we had three enemies inside our party, the three 'Hs' – Hardtalk, our old aggressive image, Hobbyism, the tendency of some to put football before politics, and Hitler. That raised a few eyebrows but most accepted it had to be said."

After race riots last summer, Carol Hughes, Terry Grogan and David Edwards won council seats with a total of 10,000 votes in Burnley. "We have doubled our membership in the past 12 months," Mr Griffin said, although he would not give a figure. "In the past, the party didn't think local councils were worth contesting, but I believe the opposite. We must win there before we can challenge for Parliament. In some of the north-western mill towns, we have a tremendous future."

He says the festival was brought to Lancashire to thank the people who voted for the party and to welcome prospective voters. But opposition groups are furious, not least because they have been banned by the police under the Public Order Act from assembling within five kilometres of the festival. To make things worse, the Anti Nazi League has been told by Burnley Council that it cannot stage a carnival in September because of tensions in the town.

Julie Waterson, the league's national organiser, says people must see through the BNP's new image. "Whatever they say publicly, you have to remember that these people are still Nazis. At last year's festival, there were Nazi salutes, anti-Semitic and racist jokes, and they were singing Nazi songs. They won't change."

Paul Moore, a Labour councillor in Burnley, and Shahid Malik, a Labour activist, are trying to give local people "the benefit of foresight" before they embrace the BNP's divisive policies. In recent months, they say, their have been several attacks on Asians in Burnley.

"Our main task is to stop this unintentional collusion with them," Mr Malik said. "For example, the police have allowed them their political festival but they won't let the Anti Nazi League demonstrate there, and the council won't let the league hold its own carnival for fear of upsetting BNP supporters. All it takes for these people to succeed is for us to do nothing."

Mr Griffin says his party is misunderstood. He does not mind if an ethnic minority group remains in the UK as "the salt in the soup". All he wants, he says, is to preserve the white, British way of life.

But Ms Waterson said: "In the Thirties, did Hitler get into power by saying he was going to kill millions of Jews? No. He just said, 'Look, three million unemployed, three million Jews.' Work it out for yourself."