A joint statement issued by Austrian Chancellor Sebastian Kurz, interior minister Vice-Chancellor Heinz-Christian Strache and Interior Minister Herbert Kickl outlined plans to tighten restrictions, especially at its southern borders with Slovenia and Italy.

Mrs Merkel’s agreement with Horst Seehofer’s Christian Social Union (CSU) party last night headed off a potential rebellion which could have seen him quit his role as interior minister and plunge her fragile administration into crisis.

Details of the deal are scarce, but Mrs Merkel said it involved the creation of transit centres to send back asylum seekers already registered in other EU countries.

She added that a "new border regime" would tackle secondary immigration on the German-Austrian border.

Describing it as a “a really good compromise”, she claimed it would secure the principle of freedom of movement within the EU while allowing Germany to take "national measures" to limit migrant arrivals.

But the trio of Austrian politicians said it would cause a domino effect, causing them to assess their own border protections, particularly in the south by Italy and Slovenia.

In their statement, released immediately after Mrs Merkel and Mr Seehofer made their announcement, they said they first wanted to see whether the new agreement would win the support of the entire government in Berlin.

But they added: “Should this agreement thus become the German government position, we will see ourselves forced to take action to avert disadvantages for Austria and its population."

Border controls at the Italian-Austrian border pass known as Brenner were also up for debate, the statement explained.

The statement said: "The German considerations prove once again how important a common European border management is and the Austrian position that a Europe without borders is only possible with functioning external borders, is vindicated.”

Meanwhile Mr Seehofer has already had a phone conversation with Mr Kurz about the latest developments, and may fly to Vienna shortly for face-to-face talks.

He told German TV station NTV: "I have the impression that he is interested in reasonable solutions.”