The meeting comes amid the looming threat of being booted out of parliament after failed promises and internal bickering.
The conference is being held in the southern city of Nuremberg on Saturday and Sunday - two months after the party chose a former economy minister as its election candidate in a bid to breathe new life into the party's flagging popularity.
Merkel says she wants another term in government with the pro-business party but its fortunes are uncertain as its ratings among voters have plummeted since its historic showing in 2009 elections.
A failure to see through tax cuts, which was the party's key campaign pledge from four years ago, has disappointed many supporters, as has a brief flirtation with a more eurosceptic line and party disunity.
A series of disastrous regional election defeats followed, with polls consistently showing the party hovering around the five percent threshold for winning seats in the Bundestag lower house of parliament.
After clinching 14.6 percent in 2009 in its best ever score, the party faces being cast out into the political wilderness for the first time in its 55-year history after September 22nd if it does not win back voter confidence.
That could force Merkel's conservative Christian Democratic Union (CDU) into an alliance with the centre-left Social Democrats, or the ecologist Greens. It could even hand the centre-left opposition a majority.
Amid a tax evasion scandal involving Bayern Munich president Uli Hoeneß, a
political ally of Merkel, her conservatives slipped three points to 39 percent in a weekly poll published Wednesday, pushing them below 40 percent for the
first time this year.
While the FDP scored five percent, giving the coalition a combined 44 percent, it puts them just behind their centre-left rivals' joint score of 45 percent, in the survey for Stern news magazine and RTL TV.
In the face of the apparent voter backlash, Foreign Minister Guido Westerwelle, an FDP member, welcomed Thursday a readiness by the opposition to discuss possibly having another stab at the German-Swiss tax agreement, to tackle Germans who are stashing money in Swiss accounts.
In another survey, by Pollytix and also released Wednesday, the FDP scored 4.7 percent but historian and political scientist Paul Nolte, of Berlin's Free University, said the party traditionally tended to be under-estimated in polls.
Nevertheless he said the party had slumped in the popularity stakes due to "weakness" in the party's management, difficulty in positioning itself and "uncertainty" over what a liberal party should be in a changing political
Since 2011, the FDP has dropped out of six regional parliaments out of 16, and its leader and Economy Minister Philipp Rösler offered to step down as head of the party after a January defeat for the ruling CDU/FDP coalition in the state of Lower Saxony.
The Free Democrats, in a surprise move, pulled off a good result due to tactical voting by conservatives, allowing Rösler to remain party chief but not be chosen as its main candidate in the September ballot.
That role fell to Rainer Brüderle, 67, who told Thursday's Bild that the prospect of a possible tie-up between Merkel's conservatives and the Greens did not concern him. "With black-green, the Union (conservatives) would lose its soul," he said, referring to the colour code of German politics.
Adding to the uncertainty is the recently launched eurosceptic Alternative for Germany (AFD) party, which, according to Nolte, poses a threat for all the right-of-centre parties.
"But it's true that in the FDP's case, this one or two percent that it may take, can make the difference between getting six percent and staying in parliament or only having 4.5 percent and leaving," Nolte added.