German Chancellor Angela Merkel's Christian Democrats (CDU) party has suffered a historic defeat in state elections in Berlin.

Photo: AFP

The election in the city-state of 3.5 million people was dominated by local issues including poor public services, crumbling school buildings, late trains and a housing shortage, as well as problems in coping with an influx of refugees and migrants.

The CDU's vote share plunged below 18 percent, meaning it has been ousted from the state governing coalition with the centre-left Social Democrats.

Meanwhile, the right-wing anti-migrant party Alternative for Germany (AFD) made gains and will enter the state parliament for the first time.

Mrs Merkel's popularity has waned since her decision last year to allow more than a million migrants into Germany.

The CDU won 17.6 percent of the vote - its worst result in Berlin.

It is the party's second electoral blow in two weeks, having been pushed into third place by the AFD in Mecklenburg-Western Pomerania at the beginning of the month.

The Social Democrat party has emerged as the strongest party with a projected 22 percent, in spite of losing almost 7 percent of their voters.

The strong showing of the AFD, projected to win about 14 percent, prompted its co-chairman Joerg Meuthen to say the party was strongly positioned for next year's national elections.

"We are firmly convinced that we will end next year with a double-digit result,'' he said.

The AFD is now set to be represented in 10 out of 16 state parliaments.

Bavarian Finance Minister Markus Soeder, from the CDU's sister party CSU, was quick to call it the "second massive wake-up call" in two weeks.

"A long-term and massive loss in trust among traditional voters threatens the conservative bloc," he told the Bild daily, adding Ms Merkel's right-left national coalition had to win back support by changing course on its immigration policy.

- BBC