Matthew Gruter was one of 60 black-clad demonstrators who were allowed to assemble outside NSW parliament and yell Hitler youth chants on November 8.
Gruter was among several demonstrators later unmasked, triggering Home Affairs Minister Tony Burke to cancel his visa.
About 4am Tuesday, immigration officials took Gruter into custody where he will remain until he's deported or obtains his own ticket to leave.
"If you're on a visa, you're a guest in Australia, and if a guest turns up to your home, you've got expectations about how they'll behave," Mr Burke told reporters.
"If someone turns up for the purposes of just abusing people and wrecking the place and damaging the cohesion, you can ask them to leave.
"Australia has asked them to leave."
Because the decision was made by a minister, Gruter is expected to leave very soon as he has limited grounds for appeal.
"We're setting a standard for Australia," Mr Burke said.
"Somebody who gets involved in neo-Nazism in Australia, they shouldn't pretend that they're somehow patriotic.
"They hate modern Australia."
According to Gruter's supporters, his wife and four-week-old child have been given 30 days to leave the country, but Home Affairs would not confirm details about his family.
Liberal frontbencher Jonno Duniam backed the government's decision and said there was "no room in Australia for clowns like that".
One Nation leader Pauline Hanson said she was totally opposed to neo-Nazis.
But United Australia Party senator Ralph Babet defended Gruter's right to free speech, warning "eventually the same power and attitude will be turned against you for your views".
The neo-Nazi rally has renewed a push to stop protests near synagogues, a month after rushed protections were struck down by the courts for being too broad.
The refined powers, which allow police to move on protesters who affect a person's ability to enter or leave a place of worship, will be reinforced through a bill introduced to NSW parliament.
"This change strikes the right balance between protecting the community and the right to protest," NSW Attorney-General Michael Daley said.
"It is not acceptable that someone is harassed or intimidated simply for attending their church, synagogue, temple or mosque."
The laws were brought to parliament in February after a spate of anti-Semitic graffiti and arson incidents across Sydney and Melbourne.
But the Supreme Court in October ruled the laws were invalid and went what was needed to protect of people entering and leaving a place of worship.
Labor is also mulling outlawing Nazi slogans, in line with bans on Nazi symbols, and boosting police powers to to de-authorise rallies such as those those by white nationalists.
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