Under current laws, asylum seekers are only forcibly sent back if they have been sentenced to jail terms of at least three years, and if their lives are not at risk in their countries of origin.
However, on Saturday, Merkel backed a sharp toughening of expulsion rules for convicted refugees, saying that even those who have been given suspended sentences should also be required to leave Germany.
"If a refugee flouts the rules, then there must be consequences; that means that they can lose their residence right here regardless of whether they have a suspended sentence or a prison sentence," she said.
After dozens of women in Cologne were sexually assaulted on New Year's Eve by a crowd of men -- described by witnesses as mostly of Arab and North African appearance -- Merkel said it was time to ask, "When do you lose your right to stay with us?"
"We should ask ourselves whether it might be necessary to take this away earlier (than is currently the case), and I have to say that for me, we must take it away sooner," the chancellor said.
"We must do this for us, and for the many refugees who were not present during the events in Cologne," she told a meeting of party officials in the southwestern city of Mainz.
Merkel had already called for a discussion on whether to toughen the deportation policy, but this is the first time she has explicitly backed a change in the law.
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In revelations that have shocked Germans and claimed the scalp of Cologne's police chief, women seeing in the New Year had to run a gauntlet of groping, lewd insults and thefts in an aggressive and drunken crush of around 1,000 men.
By Friday, Cologne police had received over 200 criminal complaints, mostly over sexual offences from groping to two alleged rapes, Spiegel Online reported.
Officials from Merkel's conservative Christian Democrats party, meeting in Mainz this weekend, are set to propose that migrants jailed for any length of time in Germany should face deportation.