BERLIN (AFP) - Germany's Angela Merkel is used to owning the room when she speaks to her party faithful, but the mood turned hostile when she defended her open-door refugee policy this week.

In a heated atmosphere, some of the 1,000-odd members at the meeting warned of a "national disaster" and demanded shuttering the borders as Germany expects up to one million migrants this year.

"Stop the refugee chaos - save German culture + values - dethrone Merkel," read a banner at the congress late on Wednesday (Oct 14) in the eastern state of Saxony, the home base for the anti-foreigner PEGIDA movement.

Dr Merkel, who grew up behind the Iron Curtain in the communist East, insisted she would stay the course and told party members that "isolation already failed in the days of East Germany".

Managing the refugee crisis has turned into Dr Merkel's greatest domestic political challenge since she took power almost 10 years ago, in November 2005.

Long valued by the electorate for her level-headed leadership amid the euro zone turmoil, Dr Merkel has scared many with her welcoming stance amid a growing sentiment that the boat is full.

"The chancellor is walking on thin ice," judged the conservative daily Die Welt, pointing to a "growing gap" between Dr Merkel and the base of her centre-right Christian Democrats (CDU), who demand she stem the record influx.

"The chancellor believes the nation can manage the crisis, but this belief is rapidly vanishing in the country," said the newspaper.

'WE CAN DO IT'

In a crisis that is local, regional and international, Dr Merkel was heading to a Brussels summit later on Thursday (Oct 15) to reiterate her call for European "solidarity" and push for member-states to share the burden in a quota system.

On Sunday (Oct 18), she jets off to Turkey to discuss with President Recep Tayyip Erdogan how to slow the inflow sparked by war and upheaval across the Middle East and North Africa, with almost 600,000 people arriving in Europe so far this year.

On the home front, Dr Merkel has bravely insisted "we can do it", recalling US President Barack Obama's campaign rallying cry of "Yes we can".

But many Germans - who in the summer greeted refugees at railway stations - are losing faith as thousands keep coming daily and improvised refugee centres are bursting at the seams, including tent cities exposed to below-zero temperatures as winter approaches.

The Frankfurter Allgemeine Zeitung said that "the revolution" Dr Merkel had sought to lead within her party "threatens to derail".

The CDU has seen the defection of several thousand members, while usually rock-solid approval ratings for Dr Merkel and her party are slipping.

The party and their Bavarian allies the CSU have slipped by three points to 38 per cent, their lowest level since the last election in September 2013.

A letter by an initial 34 CDU members protesting against her policy has now been signed by 126, including many state legislators, reported Bild daily.

Bild even asserted Dr Merkel was losing the support of her loyal veteran Finance Minister, Wolfgang Schaeuble, and mused whether he could replace her.

"The refugee crisis is stressing the successful duo," it said. "He disapproves of what she is doing."

"Merkel is still the driving force," it added. "But if it goes on like this, how much longer?"

With three state elections in March, the report said, "everyone in the party knows: Schaeuble is the only one who could replace Merkel."

'GRAND FAILURE'

Dr Merkel meanwhile faces an open rebellion in the southern state of Bavaria, the main gateway for migrants who arrive via the Balkans and Austria.

State Premier Horst Seehofer said on Thursday (Oct 15) some 300,000 refugees had arrived since Sept 1 and that municipalities were struggling to cope.

"Even improvisations and emergency measures are finite," he said. "The district administrators can calculate very well how many sports gyms they have left."

"Without restricting immigration, we will face a grand failure in Germany and Europe."

The lower house on Thursday (Oct 15) passed a law that eases repatriation for asylum-seekers from Albania, Kosovo and Montenegro by declaring them safe countries of origin.

The law will also replace cash payments for asylum seekers with vouchers for food and other services to reduce a financial incentive for some migrants.

Hoping to further appease the discontented, Dr Merkel has said she is open to a CSU proposal to create "transit zones" near the border, where asylum seekers with no chance of staying could be quickly sent back home.

But this plan was rejected by the Social Democrats, her coalition partners, whose parliamentary leader Thomas Oppermann said his centre-left party would never accept "border detention centres for thousands of refugees".