Merkel warns German parties against populism

"A party like the AfD is not only a challenge for the CDU... but a challenge for all of us sitting here," Merkel told MPs.

In Sunday's vote, the CDU went down four percent compared to five years ago with 19 percent of the votes, and fell to third place behind AfD. The AfD, which ran for the first time in the eastern state, ended up with 21 percent of the ballots. The Social Democratic Party (SPD) finished first with 30 percent, but five percent less than five years ago.

In her speech, Merkel tried to rise above the political storm surrounding her open-door refugee policy to project stability and calm.

Following the bruising defeat of her CDU party, calls for a cap on migration and pressure on Merkel to take a U-turn in her refugee policy escalated.

Moderate speech

Merkel warned against giving into populism and tried to defeat AfD by using the same populist techniques to win back voters.

She said she will resist pressure for “seemingly easy solutions that are actually illusory solutions.”

"Politicians like us have a responsibility to moderate our speech," she said.

"If we begin to orientate our speech and acts towards those who are not interested in solutions, we will lose our own direction in the end. If we resist that and stick with the truth, then we will regain what's most important – the trust of the people," she said.

She also added that “scolding the voters achieves nothing”.

Merkel, who is facing a general election a year from now if she decides to seek a fourth term, urged Germans to remain open and embrace change.

"In these times of globalisation, we serve our country best if we’re guided by the values that made us what we are: freedom, security, justice and solidarity," she said.

Merkel on the other hand vowed to strengthen security at home and speed up repatriations of migrants who were denied asylum in Germany.

She also tried to assuage voter concerns about the preservation of Germany's core values, saying that "Germany will remain Germany", despite the increasing number of asylum seekers. More than one million migrants have arrived in the country since last year.