The right-wing Danskernes Parti, who consider themselves "National Democrats," handed out almost 150 of the spray cans on the streets of Haderslev, a port town in the southeast of Denmark on Saturday.
As the use of pepper spray is illegal in Denmark, the party used hair spray instead for their campaign.
Izza Leghtas, a Senior Advocate for Europe at Refugees International, condemned the move as "an appalling act of hostility and xenophobia towards asylum-seekers and refugees."
"People who have fled to Europe to escape from war and violence should find the protection they need, and be treated with respect like any other human being. Yet too often, they find closed doors and prejudice. This is the latest, extreme example of that," she said in a statement to CNN.
Danskernes Parti leader Daniel Carlsen defended the controversial move.
"I cannot see how it is racist. Pepper spray is illegal here so we wanted to figure out a way for Danish people, in particular women, to protect themselves. It's obviously not the ideal situation. In the long run we want to repatriate the migrants, we want to repatriate non-Westerners in general, that is in the long run. In the short run we want to provide solutions to make life better and safer for the Danish people."
In recent months immigrants have been blamed for several deadly attacks across Europe, including a Bastille Day attack in Nice, France
, that killed 84 people and a suicide bombing in Ansbach, Germany
that injured 15.
In a statement about the spray cans, the United Nations High Commissioner for Refugees (UNHCR) said it "strongly regrets that this kind of incident is taking place in Denmark against asylum seekers and refugees, people who have already suffered so much."
The statement went on to say that the UNHCR does not believe that the Danskernes Parti is representative of the Danish people.
"It is a small group that is involved in this incident and only represents a very small fraction of the Danish people and UNHCR is confident that most Danes also strongly condemn this incident."
But Carlsen said, "It is a disgrace to Denmark and Europe as a whole that an organisation like this is promoting mass immigration to Europe, and it will destroy Europe. We are not saying that migrants are all rapists, but the problem with mass migration is the mass, and because of the mass it will in time replace the indigenous people of Europe."
According to their official website
, the Danskernes Parti needs some 20,103 signatures to get on the ballot in the next general election.
"We are pretty sure that we will stand in the next election," said Carlsen, adding that the party has gained 700 signatures in the last two days.