The head of Germany's Christian Social Union said that the party will no longer make an upper limit on refugee numbers a condition for continuing its coalition with Chancellor Angela Merkel's Christian Democratic Union.
"The situation has changed, the policy in Berlin has changed," CSU chief Horst Seehofer said in an interview with German public broadcaster ARD. "We now have much less immigration."
The conservative politician previously said that there would be no coalition contract with the CDU without the cap on immigration.
In the CSU's election manifesto for the upcoming parliamentary elections next month, the Bavarian-based conservative party had called for an upper limit of 200,000 refugees annually into Germany.
Merkel stood against such a limit, saying it'd be unconstitutional.
Meanwhile, German Foreign Minister and Vice Chancellor Sigmar Gabriel has not categorically ruled out a continuation of the "grand coalition" between Merkel's conservative bloc and his own centre-left Social Democrats (SPD) beyond September's parliamentary election.
Ultimately, "neither the CDU/CSU nor us wants a continuation of the grand coalition," Gabriel told reporters.
"In the end, it's up to voters to decide, which is good in a democracy," Gabriel asserted.
In August, the Vice Chancellor had distanced himself from a new coalition in clearer terms, telling magazine Stern the parties would part ways.
The former SPD leader said that national unity governments comprised of Germany's main traditional parties were not an "ideal constellation" as they tended to strengthen fringe parties in the long run.
Gabriel also said there were key points of difference between the CDU/CSU and the SPD on forward-looking issues. These included arms, pensions and health "which I find it hard to see being overcome," he added.
Recent polls show that Merkel's conservative bloc remains the favourite to win next month's national election.
Merkel's rival, SPD leader Martin Schulz said last week he was confident of ending Merkel's 12 years in power and taking over the chancellorship, despite trailing in opinion polls.