BERLIN, July 2 (Xinhua) -- German interior minister Horst Seehofer (CSU) has offered to resign in a dramatic turn of his escalating cabinet conflict with chancellor Angela Merkel (CDU) over asylum policy.

Seehofer announced that he was willing to step down both from the position of interior minister and party leader of the Christian Social Union (CSU) due to the continued rejection of controversial unilateral measures in his "migration master plan" by the Christian Democratic Union (CDU).

Having held emergency talks with Merkel in Berlin over the weekend, the CSU leader said that he remained unconvinced that the new joint asylum policy regime agreed at a recent European Union (EU) summit was compatible with his party's desire for controlled and limited immigration.

At the same time, Seehofer noted that he had not yet made a final decision about his political future and would give the CDU another chance to convince him to stay on by reversing course.

The CDU and CSU are scheduled to hold high-level talks requested by Seehofer in a bid to resolve their differences over asylum policy on Monday afternoon.

While Merkel has succeeded in forging an EU consensus on stricter asylum policies in the bloc, including provisions for processing centers in so-called "transit countries", the CDU and CSU have still been unable to overcome their impasse over the question of whether or not to turn back asylum seekers at the German border who were already registered in another Schengen area country.

As outlined in his "migration master plan", Seehofer wants to refuse asylum seekers access to German territory if they have already formally entered the Schengen zone via another country. However, Merkel has warned of a resulting domino effect as Germany's neighbors rush to shutter their internal Schengen borders.

The CDU has rallied behind Merkel in defending her alternative European solution following the conclusion of the Brussels EU summit. "Unilaterally turning back refugees at the border would send the wrong signal to our European partners," party secretary Annegret Kramp-Karrenbauer told press.

By contrast, senior CSU politicians including ex-transport minister Alexander Dobrindt warned on Monday that they continued to support Seehofer's stance and may not accept the resignation of the 68-year-old party leader.

Nevertheless, Bavarian governor Markus Soeder (CSU) played down the likelihood of a collapse of the government and the legislative alliance traditionally formed by the CDU and CSU over the issue.

Similarly, CDU deputy leader Volker Bouffier called for calm ahead of the CDU and CSU talks and emphasized that it was critical that the alliance between the two conservative sister parties "remained intact". Bouffier argued that a stable government was needed in order for the ruling "grand coalition" to effectively represent the interests of German citizens.

The meeting between the two parties at the CDU headquarters on Monday will be attended by Merkel, CDU/CSU parliamentary faction leader Volker Kauder (CDU) and Kramp-Karrenbauer, amongst others.

In the meanwhile, the German Social Democrats (SPD) have criticized the "self-indulgent infighting" between the CDU and CSU in the "grand coalition".

Finance minister Olaf Scholz (SPD) told the public broadcaster "ARD" that he could not understand the failure of Merkel and Seehofer to reach a pragmatic solution and called for a rapid return to the day-to-day business of governing Germany.

A position paper which will be signed off by the SPD on Monday expresses support for Merkel's vision of asylum policy by calling for a "joint European solution" and a "fair distribution of burdens" in the processing and housing of refugees across the continent.