Bavarian state premier Horst Seehofer berated Merkel's open-door policy as the chancellor stood on stage beside him at a Munich congress attended by some 1,000 members of his conservative CSU party.
“We want control and order, but we also want a limit — in the national interest,” said Seehofer, whose state bordering Austria has become Germany's main gateway for people fleeing wars in Syria, Iraq, Afghanistan and elsewhere.
“I can only tell you that we will be talking about this again, and I hope that we will come to an understanding,” Seehofer said before his party faithful, as a visibly uncomfortable Merkel stood beside him, staring at the floor.
For Merkel, Germany's refugee influx, predicted to reach one million people this year, has become the biggest challenge of her chancellorship as she marks 10 years in office this weekend.
Her decision to welcome Syrian refugees has won her plaudits but also sparked a backlash, with some senior ministers openly questioning the approach and her usually stellar poll ratings slipping several points.
In her speech minutes earlier to her CSU sister party, Merkel had again insisted that the top EU economy can and will shelter people in need and that “isolation and inaction are no solution in the 21st century”.
She has argued that Germany's constitutional right to asylum knows no numerical upper limit, stressing that to reduce refugee flows Germany must work in concert with its EU and international partners.
Key steps would be to combat the root causes of the refugee crisis, by working to end the Syria conflict and fighting the Islamic State group, by securing the EU's external borders and combating human traffickers, she said.
“With this approach to reducing migrant numbers — as opposed to a unilaterally-set national ceiling — we will manage to act in everyone's interest,” she told the congress.
Under Berlin's proposal, the EU would accept a fixed number of refugees, likely several hundred thousand, a year, who are now in camps in Turkey, which would in turn seal its land and sea borders to the bloc.
The EU would also better protect its external borders and distribute the refugee intake among its 28 members under a national quota system, while keeping internal European borders open.
Vice Chancellor Sigmar Gabriel and Foreign Minister Frank-Walter Steinmeier — both from the centre-left Social Democrats, Merkel's other coalition partner — in a commentary for Spiegel Online Friday supported the proposal.
However, so far most EU members have shown little enthusiasm for taking in more refugees, and the position has only hardened in many European capitals in the aftermath of the Paris jihadist attacks.