The compromise, if confirmed, would help de-escalate a row that had threatened to blow-up the 70-year-old alliance between the two conservative parties - Bavaria's Christian Social Union (CSU) and the Christian Democratic Union - potentially destabilising Merkel's government.

The row is centered on an asylum system reform plan CSU leader Seehofer wants to implement in Germany, which would see migrants who had already been registered in another European Union country turned away at the German border.

Merkel opposes any unilateral move by him that would reverse her 2015 open-door policy on migrants and undermine her authority.

She insists that an EU-wide settlement must be reached at a June 28-29 Brussels summit, and says Seehofer's "masterplan" to turn away migrants who have previously been expelled would prejudice her chances of reaching a multilateral deal.

Under current German law, anybody who lodges an asylum request at Germany's border is admitted to the country.

Merkel is adamant that a European solution is needed and is seeking bilateral deals with some partners, such as Italy and Greece, similar to one agreed in 2016 between the EU and Turkey, which cut the number of migrants reaching Europe.

Australian Associated Press