Speaking after meeting in the Russian city of Sochi on Tuesday, Putin said there was “no alternative to the Minsk deal”.
For her part, Merkel, stressed that “implementation is a problem, not the agreement itself”.
The accord was signed by Ukraine, Russia, Germany and France in February 2015 in the Belarusian capital of Minsk to stop the fighting in eastern Ukraine and withdraw heavy weapons 15km on either side of the front line. It also says local elections must be held in the breakaway regions of Donetsk and Luhansk.
“We cannot change that deal and make new plans just because we cannot enforce basic agreements,” Putin said, adding, however, that the Kiev government “lost its chance of resolving this conflict a couple of years ago”.
“Now the situation is a lot more complicated in the political and economic terms,” he said.
Putin also tried to distance Russia from the conflict by stressing the need for direct talks between Kiev and the leadership of the breakaway Donetsk and Luhansk regions.
Merkel urged Putin to do everything in his power to achieve full ceasefire between Russia-backed rebels and the Ukrainian government forces.
“Ukraine should be given access to its own state border,” Merkel said, stressing the need of holding local elections in the separatist regions that would lead to “a legitimate leadership within Donetsk and Luhansk”.
“By implementing the Minsk agreement we want to come to a position where we can actually end the sanctions against Russia [imposed for its role in the conflict and for annexing Ukraine’s Crimea Peninsula in 2015],” she said.
Al Jazeera’s Stefanie Dekker, reporting from Sochi, said the meeting was important because the relations between Russia and the West have been so strained over the past few years.
“Nobody expected any breakthroughs when it comes to the Syria and Ukraine conflicts. But the meeting is important in the realm of international relations,” she said.
“They are on the same page when it comes to Syria, but see the Ukraine conflict a little different. If anyone was looking for uneasiness between the two leaders, I think they wouldn’t have found that.”
Merkel expressed concern to Putin about reports of violence against homosexuals, especially in Chechnya, urging the Russian president to “use his influence” to put an end to the abuse.
She also stressed the importance of protecting the freedom of people to assemble and express themselves in public.
“The possibility of the right to demonstrate is a part of civil society,” she said, reacting to the detention of hundreds of protesters in Moscow in recent weeks at anti-government demonstrations.
Putin said Russian police were “more reserved and liberal” than their counterparts in some European countries who use tear gas unlike Russia.
He also shrugged off allegations that Russia would try to meddle in the upcoming German parliamentary elections and dismissed such claims regarding the United States as unsubstantiated rumours.