Early on Monday, Seehofer confirmed he would offer to step down from the posts, while party leaders are reportedly trying to convince the minister to stay put.
Speaking outside the CSU headquarters after a leadership meeting, Seehofer told reporters “I said yes, that I would make both posts available, which I will do within three days”.
He added he would meet Merkel’s Christian Democratic Union (CDU) on Monday in hopes of reaching an agreement “in the interests of this country and the ability of our coalition and government to rule, which we want to preserve”.
Merkel and Seehofer have been embroiled in a dispute for weeks over the interior minister’s plan to start turning away migrants at the German border who have already registered elsewhere in the European Union (EU).
If the CSU withdraws its support for Merkel’s coalition, she would be left without a majority in the German parliament, possibly prompting fresh elections.
Merkel is opposed to Seehofer’s plan, which she said would cause a domino effect in Europe. But Seehofer has stood firm and gave the chancellor a two-week deadline in June to broker a European solution or he would start implementing the policy unilaterally.
On Friday, Merkel and the rest of the EU leaders hammered out a vaguely-worded deal to share out refugees on a voluntary basis and create “controlled centres” inside the bloc to process asylum requests.
But on Sunday party sources told AFP news agency that Seehofer was unhappy with the accord and complained that he had endured a “conversation with no effect” with Merkel on Sunday.
Reuters news agency also quoted a party source as saying that Seehofer saw no alternative to turning some migrants back at the country’s border.
The CSU’s hard line on migration comes amid a growth in support for the far-right Alternative for Germany (AfD) party in Bavaria, where state elections will be held in October.
In a televised interview on Sunday, Merkel said “The sum of everything we have decided has the same effect [as national measures]”.
“That is my personal conclusion. Of course, the CSU will have to decide that for itself,” she added.
If Seehofer goes ahead with his resignation, the CSU, the sister party of Merkel’s CDU, can either propose a new interior minister or decide to pull out of the coalition government altogether.
This would leave Merkel and her remaining coalition partner the Social Democrats (SPD) with a minority in the parliament – something she could bridge by courting support from opposition parties for legislation or finding an additional coalition partner.
Last November, when Merkel was negotiating her fourth coalition, the long-time chancellor told German broadcaster ZDF she was “very sceptical” about leading a minority government and would rather call new elections.
Under the deal brokered in Brussels, EU leaders agreed to consider setting up “disembarkation platforms” outside the bloc, most likely in North Africa, in a bid to discourage migrants and refugees boarding EU-bound boats.
Member countries could also create processing centres to determine whether the new arrivals are returned home as economic migrants or admitted as refugees in willing states.
At the national level, Merkel proposes that migrants arriving in Germany who first registered in another EU country should be placed in special “admission centres” under restrictive conditions, according to a document she sent to the CSU and SPD.
A document circulated by Merkel to coalition allies on Friday night outlined bilateral repatriation agreements with 16 countries and proposed reception centres in Germany where migrants would undergo an accelerated asylum procedure – measures that represent a significant hardening of her 2015 open-door asylum policy.
But the Czech Republic, Poland and Hungary, whose Prime Minister Viktor Orban has long sought to position himself as Merkel’s nemesis in the immigration debate polarising the continent, later said they had signed no bilateral agreements on repatriation.
Political stability was upset by Merkel’s 2015 decision to keep borders open to migrants and refugees arriving from the Middle East via the Balkans, Hungary and Austria.
Since then, more than one million people have arrived in Germany, while Merkel’s governments have repeatedly tightened immigration and asylum laws.
The current political crisis over migration comes amid a significant downturn in the number of arrivals.
This year, about 45,000 migrants and refugees have reached Europe’s shores by crossing the Mediterranean so far while in 2017 nearly 100,000 people had arrived by the end of June.