By Joseph Nasr

HANOVER, Germany (Reuters) - The leader of Germany's anti-immigrant AfD party, riding a wave of public anger against Chancellor Angela Merkel's asylum policy, on Saturday called on her to resign for throwing the country's doors open to migrants.

"Merkel, step down. You can do it," Frauke Petry told some 600 AfD supporters, mainly gray-haired men, putting a new twist on Merkel's "Wir schaffen das" (We can do it) message to those who doubt Germany can deal with the influx of migrants expected to reach one million this year.

Petry, whose Alternative for Germany is enjoying an improbable revival after nearly imploding in a power struggle, said her party stood a real chance of entering three new state parliaments next year and the national parliament for the first time in 2017.

Petry drew at least four standing ovations with attacks on what she called Merkel's undemocratic decision to open Germany's borders to migrants who are expected to reach one million this year.

Merkel, who will attend a summit of European Union leaders and Turkey's prime minister on Sunday on the issue, has resisted pressure from her own conservatives to cap the number of refugees.

In an address to parliament on Wednesday, she vowed to stick to her open-door refugee policy, defying criticism at home and abroad which has risen due to fears about a potential security risk after the Islamist attacks in Paris.

Merkel wants a multi-pronged solution to the crisis, centered on working with other EU countries and Turkey. Others in her ruling coalition want to cap Germany's refugee intake.

Petry and Joerg Meuthen took over the AfD from Bernd Lucke, who in July left the party he founded in 2013 to oppose euro zone bailouts, citing a xenophobic shift.

The AfD placed third nationally, at 10.5 percent, for the first time this month in a survey for pollsters INSA after polling at 3 per cent after Lucke's exit. It has been stealing votes from Merkel's CDU conservatives.

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The party presented its plan to end what it described as "asylum chaos" at a summit in Hanover. About 2,500 leftist activists, some carrying banners reading "Racism is no alternative", staged a demonstration outside the venue.

'LYING PRESS'

AfD wants drastically to reduce the number of refugees in Germany by rejecting Syrians and Iraqis who come from "safe third states" like Turkey and Lebanon, and turn down asylum applicants without identification documents, among other steps.

It also wants to cut to 48 hours the processing time for asylum applications.

Under Petry, the AfD has attracted far-right supporters and officials, prompting criticism from the German media and politicians who say it is xenophobic.

Petry said her party was the victim of a defamation campaign and called the media "the Pinocchio press" and "Luegenpresse" (lying press), a Nazi-era term which anti-immigrant protesters have revived.

She added that the uncontrolled influx of asylum seekers raised the risk of "terror attacks" like in Paris.

AfD won seats in the Hamburg state assembly in February, entering a legislature in western Germany for the first time, and has since also gained seats in Bremen.

It previously had seats in Saxony, Thuringia and Brandenburg in eastern Germany - where resentment against refugees is greatest - and is gaining further momentum nationally.

Its biggest test will be the federal election in two years. Some pollsters believe it will implode before then, either because of infighting or if the refugee crisis eases.

But co-leader Meuthen said the party was confident of making into the Bundestag national parliament in two years with 20 per cent of votes.

"There will always be people with xenophobic views who will find a home in the AfD," said professor Hajo Funke of the Free University in Berlin, adding that it was unlikely but possible that the AfD could win seats in the Bundestag parliament.

(Reporting by Joseph Nasr; Editing by Richard Balmforth)