German chancellor Angela Merkel is set to announce she will run for a fourth term in next year's elections.

There had been speculation Chancellor Merkel would bow out after coming under enormous pressure over her open door approach to the refugee crisis.

The 62-year-old has led Germany for 11 years and has led her party, the Christian Democrats Union, for 16 years.

A senior member of her party and close ally Norbert Roettgen said she will run again.

"She is absolutely determined, willing, and ready to contribute to strengthen the international liberal order," Mr Roettgen said.

"But we can't see the Chancellor or Germany as last man standing."

Mrs Merkel is expected to confirm she will be a candidate on Sunday in Germany.

The announcement will come as a relief to party members who fear instability in the region and within the European Union after the decision by Britain to leave the EU and the election of Donald Trump as US President.

Weight of the 'free world' on Merkel's shoulders

Mrs Merkel is expected to play a key role in the Brexit negotiations and questions over free movement of trade and people.

If she did decide to step down it would add another level of uncertainty to an already unpredictable political environment.

Europe is witnessing a rise in populist movements and several countries will be voting next year, including France.

Mrs Merkel's popularity has fallen recently over her decision to accept almost one million refugees and migrants from Syria, Afghanistan and Iraq as well as other countries.

She has admitted that mistakes were made.

In September the anti-immigration party Alternative for Germany had a significant election victory in Berlin.

But Mrs Merkel is seen as a cornerstone of European politics and remains a favourite to win if she decides to run again.

Some analysts have suggested Mrs Merkel will be seen as the new "leader of the free world", believing Mr Trump's election has put greater responsibility on her shoulders.

Her office has said she will reveal her decision "at the appropriate time".