"Bullying and intimidation'' are not acceptable ways to conduct foreign policy the president said.
However, in a news conference on Friday with Merkel in the Russian resort town of Sochi, Dmitry Medvedev, the Russian president, said that Russia would respond to fresh attacks on its citizens in the same way as it did last week in Georgia.
"If someone continues to attack our citizens, our peacekeepers, then of course we will answer just as we did."
Medvedev also said that Georgia's two separatist regions were unlikely to ever be parts of the country again.
"After what happened, it's unlikely Ossetians and Abkhazians will ever be able to live together with Georgia in one state," he said.
Russian troops drove Georgian forces out of both regions over the past week and Medvedev said Moscow would support whatever decision the separatists made about their status.
Merkel said some of Russia's actions in Georgia have been "unacceptable" and the presence of Russian troops there is "not sensible".
"I believe that the six-point plan must be realised immediately and the Russian troops should withdraw from Georgia proper," Merkel said.
In reference to what happens next, she said "the point of departure must
be the territorial integrity of Georgia."
The two leaders also discussed a European Union initiative to send peace monitors to South Ossetia.
Medvedev said that Russia was not, in principle, against the idea of having international peacekeeping contingents in the separatist regions, but added that the problem is "that the Ossetians and Abkhazians themselves trust nobody except Russian peacekeepers".
Russian peacekeepers, he said, would guarantee the "will of the people" of the two regions.
He also said the US missile pact with Poland, signed on Thursday, bore out everything Russia had said about new defence systems in eastern Europe.
"This decision clearly demonstrates everything we have said recently," he said.
"The deployment of new anti-missile forces has as its aim the Russian Federation."