Hamburg Mayor Ole von Beust, a leader in Merkel's Christian Democrats, criticized the pro-business FDP for whipping up sentiment against state welfare spending while turning a blind eye to tax dodgers with secret Swiss bank accounts.

His criticism echoed discontent aired by other conservative leaders as opinion polls show Merkel's center-right coalition in a tailspin. Polls show a similar CDU-FDP coalition in North Rhine-Westphalia state headed for defeat in a May election.

"We can't wag our fingers at those on the bottom rungs of society while at the same time it turns out that thousands of those at the upper rungs have been parking their undeclared income in Switzerland," von Beust said.

"Fairness goes both ways - and it's irresponsible to say we should cut benefits for those at the bottom while those at the top are busy helping themselves," he told the Frankfurter Allgemeine Sonntagszeitung newspaper.

Despite FDP objections, Germany purchased bank data that was stolen from a Swiss bank with the names of thousands of German tax evaders. That prompted 6,000 Germans to turn themselves in to authorities in the last month to preempt any prosecution.

Von Beust has led Germany's first CDU-Greens coalition in Hamburg since 2008 and said such a coalition could be an option for North Rhine-Westphalia, Germany's most populous state, if the CDU-FDP government there fails to win re-election in May.

Merkel has already publicly scolded FDP leader Guido Westerwelle for picking a fight over welfare benefits.

Vice Chancellor Westerwelle has insisted Germany's welfare system needs radical revamping, and compared the debate over unemployment benefits to "late-Roman decadence".

An Emnid opinion poll showed two-thirds of Germans feel Westerwelle is the main disruptive factor in the coalition.

Merkel's conservatives have been in power since 2005 and prefer a slower reform pace than the FDP, who were in opposition for 11 years before returning to government in October.

"What bothers me about what the FDP is doing is that they're carrying out this debate about welfare reform on the backs of the weakest in our society," said Heiner Geissler, former CDU general secretary, told Deutschlandfunk radio on Sunday.

Tensions have also flared over issues such as tax cuts, health care reform, nuclear power and Greece's debt crisis.

Compounding Merkel's woes, a second CDU state leader was embroiled in a row over his party taking cash in exchange for meeting local business leaders. Saxony deputy state premier Michael Kretschmer said he made a mistake.

Last week, the deputy CDU leader in North Rhine-Westphalia resigned for the same practice.