Merkel will step down as chancellor in 2021: Report

Her decision came after both parties under her ruling coalition -- the CDU and the Social Democratic Party (SPD) -- suffered heavy losses in a regional election over the weekend, CNN reported on Monday.

Merkel announced during a meeting with officials that she will not seek to run for re-election at the party's convention in December. But she said she wanted to remain as Chancellor, a position she has held since 2005, CNN affiliate RTL reported, citing party sources.

She told party top brass her mandate running to 2021 will be "her last term", a party source told AFP, adding that she has no plans to seek a post in the European Commission following that despite speculation to that effect in Brussels.

This announcement was in contrast to Merkel's previous position, in which she linked the party leadership role to the chancellorship, meaning that she would only remain Chancellor if she was party leader.

In the weekend election held in Hesse state, while the CDU remained the largest party, results were down 10 per cent from the previous election.

The election was a second blow to Merkel's "grand coalition" government. On October 14, the Christian Social Union, (CSU) -- the Bavarian sister party to the CDU -- lost its majority in the Bavarian state Parliament.

Merkel later said that voters had lost trust in the government and that it was her job to "make sure that trust was won back".

"I will work on that with as much vigour as I can," she added.

Bavaria bore the brunt of the 2015 refugee crisis; at its peak, thousands of asylum seekers were crossing into the state every day. Since then, both Merkel and her CSU allies have been criticized for their management of the influx.