BERLIN (Reuters) - German Chancellor Angela Merkel's cabinet agreed on Wednesday to explore new policies to stop immigrants abusing welfare benefits in an effort to defuse a row within her new right-left coalition over migrants from Romania and Bulgaria.
Immigration has become a hot issue in Germany, as also in Britain and France, due to the lifting of restrictions on the rights of Romanians and Bulgarians to work anywhere in the 28-nation European Union as of January 1.
Fears of a mass influx of people who could steal German jobs and sponge off the welfare system have caused alarm, especially among Bavarian conservatives who have unleashed a storm with a paper entitled "If you cheat, you're out".
The cabinet set up a working group to report by June on steps the government could take to avoid any abuse of welfare payments by migrants, Merkel's spokesman Steffen Seibert said.
Late last year, the mayors of 16 big cities, including Cologne and Hanover, wrote to the coalition to seek help with an influx of poor immigrants from south-eastern Europe, Seibert said, adding: "When cities have to cope with problems that could be related to migration, we have to take a close look."
The working group comprises top officials from 11 ministries and a government coordinator for integration. The conservative-led interior ministry and the labour ministry, controlled by the centre-left Social Democrats (SPD), will lead the group.
Bavaria's Christian Social Union (CSU), which shares power with Merkel's conservatives and the SPD, wants benefits to be withheld from immigrants for the first three months and foreign fraudsters to be deported and banned from returning.
"Why should Germany become Europe's social repair workshop?" CSU General Secretary Andreas Scheuer said this week.
The SPD has denounced the CSU ideas as "hate slogans" and populism before local and European elections due this year.
The row has created tensions within Merkel's new government which has barely started work.
A Forsa poll on Wednesday showed 60 percent of Germans think fears about immigration by poorer people are justified, while 36 percent say they are exaggerated.
With critics accusing Merkel of failing to tackle the looming challenge of Germany's ageing population, data released on Wednesday highlighted the importance of migrants to Europe's biggest economy.
The highest level of net migration in 20 years meant Germany's population rose in 2013 for the third straight year, said the Federal Statistics Office, adding that some 80.8 million people now live in Germany.
An influx of migrants, especially from eastern Europe and crisis-hit southern European countries such as Spain and Greece, has more than offset Germany's low birth rate.
The crisis in the euro zone has brought a large number of young southern Europeans to Germany in search of employment as people seek to benefit from its relative economic strength.
In the first half of last year, 67,000 Romanians and 29,000 Bulgarians came to Germany and some economists think this will increase dramatically this year given the new rules.
German business says it needs migrant labour while the DIHK Chambers of Commerce speak of having to bring in 1.5 million foreign skilled workers by 2025.
The head of Germany's HDB construction group, Michael Knipper, told the Welt am Sonntag: "We are very interested in skilled workers from Romania and Bulgaria."
Additional reporting by Thomas Seythal; Editing by Stephen Brown and Gareth Jones