German Chancellor Angela Merkel defended her refugee policies in the face of a recent electoral setback to a right-wing party in her home state, saying Wednesday that "the situation today is many times better than it was a year ago."

Merkel, whose Christian Democrats (CDU) fell behind the anti-immigration Alternative for Germany (AfD) party in the north-eastern state of Mecklenburg-Vorpommern Sunday, added that "there is of course a lot left to do."

The chancellor said that her government had introduced measures to integrate hundreds of thousands of refugees and improve security in the country, but that more work was required to win back the trust of disaffected voters.

She acknowledged that her government still needs to improve the mechanism to send back failed asylum seekers and those whose bid is unlikely to succeed, saying, "we need to tell them to leave, or else we cannot manage the job" of integration.

The comments come three days after the AfD won 20.8 per cent of the vote in Merkel's mostly rural home state, displacing the centre-right CDU as the second-strongest party in the region. The result means the AfD can enter the state parliament for the first time.

Its eurosceptic, anti-migrant message has also propelled it into third place in national opinion polls, meaning it is likely to enter the Bundestag after next year's general election.

"We are all spurred by one question: how do we deal with this?" Merkel told the Bundestag. "We have to take responsibility. The concerns of voters are to be taken seriously. ... A party like the AfD is a challenge for all of us in this house."

The chancellor, who has come under fire for her failure to explicitly condemn Turkey's sweeping purge of suspected coup supporters, also defended the European Union's refugee deal with Ankara.

She said the deal has led to a significant reduction of migrant deaths in the Aegean Sea, and added that it should be "be a model for similar deals" with countries including Egypt, Libya and Tunisia.

The chancellor was speaking during the annual parliamentary debate about the budget, which is traditionally an occasion for opposition parties to criticize the government's policies.

Dietmar Bartsch, the leader of the opposition Left Party in parliament, said that Merkel's coalition was "de facto done for" ahead of the 2017 general election.

His counterpart for the opposition Green Party, Katrin Goering-Eckardt, criticized the infighting between the CDU and its junior coalition partner, the centre-left Social Democratic Party (SPD).

"The coalition is a coalition of chaos - everyone against everyone else," she said, referring to differences between the two coalition members on policies ranging from domestic security to refugee integration.

Latest news

Syrian opposition rules out future role for President al-Assad

The Syrian opposition said Friday it would not accept any role for President Bashar al-Assad in the future of the war-torn country, reacting to a recent US shift saying that removing al-Assad is no longer a priority for Washington.

Russian Army integrates breakaway forces of Georgian province

Parts of the small fighting forces of the Georgian breakaway province of South Ossetia have been placed under Russian military control, Russian Defence Minister Sergei Shoigu said on Friday.

Czech Republic's Pilsner Urquell beer is now Japanese

Japanese brewing company Asahi completed its takeover of the Czech brewery Pilsner Urquell on Friday, Asahi said in a statement.

Judge approves 25-million-dollar settlement of Trump University case

A US district judge on Friday approved a 25-million-dollar settlement of lawsuits and state fraud allegations against Trump University, the US president's now-defunct business venture.

Former Thai premier Thaksin to junta on reconciliation: 'Cut me out'

Former Thai prime minister Thaksin Shinawatra on Friday announced that he is not interested in the junta-led reconciliation process, three days after the junta handed him a half-a-billion-dollar tax bill for his past business deal.

Dalic: We welcome possible deal between Agrokor and banks

The government welcomes the possibility of an agreement being concluded between the Agrokor food company and creditor banks, and the bill on vitally important companies is not a fallback plan but the result of the government's care for the overall economic and financial stability of Croatia, Deputy Prime Minister and Minister of Economy Martina Dalic told a press conference in Zagreb on Friday.

Croatia, China sign action plan for cooperation in agriculture

The Croatian and Chinese ministries of agriculture on Friday signed an action plan for cooperation in the field of agriculture for the period 2017-2018, the Croatian ministry said in a statement.

ZSE indices up, Agrokor shares in focus of investor interest

The Zagreb Stock Exchange (ZSE) indices on Friday rose by more than 1.8%, with stocks of the Agrokor food and retail concern being in the focus of investor interest again.

Berlin police defend handling of Berlin market attacker

Berlin police defended themselves on Friday against accusations that they stopped surveillance on Berlin Christmas market attacker despite knowing in June 2016 he was dangerous.

Croatia, creditors tailor emergency measures to save tottering giant

Croatia's tottering retail and food giant Agrokor reached an agreement with its creditors, putting its debts standby and allowing it to continue working during emergency restructuring, the Croatian branch of Austria's Erste Bank said Friday.

Agrokor's creditors say standstill agreement to go into force today

A standstill agreement regarding the Agrokor concern's existing financial obligations to banks will take effect on Friday, additional capital will be injected into the concern in the coming days and the concern will be actively restructured, which includes a change of its management, it was said on Friday after a meeting between Agrokor's suppliers and creditor banks.

Palestinians, UN slam Israel's new settlement plan

Palestinians, Israeli activists and the UN lambasted the government of Israeli Prime Minister Benjamin Netanyahu on Friday, a day after it gave the go-ahead for the first new West Bank settlement in a quarter of a century.

South Sudan rebels release three abducted foreign oil workers

South Sudanese rebels have released three foreign engineers they abducted in early March in the oil-rich Upper Nile region, Foreign Affairs Ministry official Mawein Makol Arik said on Friday.

Turkish opposition: Imprisoned party chief has gone on hunger strike

The head of Turkey's pro-Kurdish opposition party has launched a hunger strike from prison.

European leagues threaten Champions League schedule clashes

The European Professional Football Leagues (EPFL) on Friday threatened schedule clashes on Champions League matchdays in an ongoing dispute with the governing body UEFA.

Danish court revokes citizenship of IS volunteer

A Danish appellate court on Friday stripped a man of his Danish citizenship for volunteering to fight for the extremist Islamic State in Syria.

Banks and Agrokor agree on key elements of standstill agreement

Member banks of the coordinating committee of financial creditors and representatives of the Agrokor food company have in principle agreed on key elements of a standstill agreement, which is expected to be signed later today, announcing changes in the company's management team, Erste Bank said in a statement on Friday afternoon.

Syrian man on trial in Sweden; mosque attack labelled terrorism

A Syrian man went on trial Friday in the southern Swedish city of Malmo, charged with terrorism and arson after an attack last year on a building used as an assembly hall by Shiite Muslims.