Speaking ahead of a crunch summit of EU leaders that will be dominated by the issue, an embattled Mrs Merkel was again forced to defend her 2015 decision to open Germany’s doors to one million migrants.
Her grip on power in Germany is loosening and she is running out of time to find a European solution for the crisis that has come to define her recent years in office and could still end up bringing her down.
Her own Interior Minister Horst Seehofer has called for police to turn back migrants registered in other EU countries, and has given her just days to come up with a suitable alternative.
Mrs Merkel was forced to arrange an emergency pre-summit meeting on Sunday with 15 other Brussels leaders. But they left without a solution on the crisis, leaving Mrs Merkel going into today’s crucial summit fighting to save her skin.
In a passionate address to the Bundestag, the Chancellor tried to win over critics from within her own ranks by insisting her decision too open Germany’s borders to migrants in 2015 was a necessary step of help to its neighbours.
But she acknowledged that with falling migrant numbers, the tighter pre-2015 immigration controls must be re-established.
She said: ”Europe faces many challenges, but that of migration could become the make-or-break one for the EU.
“Either we manage it, so others in Africa believe that we are guided by values and believe in multilateralism, not unilateralism, or nobody will believe any longer in the system of values that has made us strong.
“That’s why it’s so important.”
Mrs Merkel called for Brussels to create refugee harbouring agreements with African countries that mirror the migrant deal the EU sealed with Turkey.
Her conservatives are embroiled in an internal dispute over whether to turn back migrants at the German border who have registered elsewhere in the European Union.
The issue has divided longtime conservative allies and poses the most serious challenge yet to Mrs Merkel’s leadership, raising questions about a possible collapse of her coalition a little more than 100 days after it took office.
Mr Seehofer, of the conservative Bavarian Christian Social Union (CSU), which is preparing for regional elections in Bavaria in October, has threatened to defy the German leader’s wishes and order police to turn back asylum seekers unless she secures a broader EU deal on distributing migrants more evenly.
But many members of Mrs Merkel’s CDU say Mrs Merkel would be forced to fire Mr Seehofer if he goes ahead with his plans.
This would lead to the breakup of a 70-year alliance between the CDU and CSU and rob the German leader of her parliamentary majority.
Germany’s political chaos is bad news for the EU which looks to its wealthiest country for leadership on governance reform within the bloc.
Sigmar Gabriel, former leader of Germany’s Social Democrats, warned of the repercussions for the Brussels bloc if Mrs Merkel is ousted.
He said: “I only hope that Angela Merkel remains chancellor.”
German newspaper Handelsblatt editor, Sven Afhüppe, added: “This isn’t a debate about the future of the chancellor, it’s about the future of Europe.”