Chancellor Angela Merkel was counting the cost on Monday of an historic drubbing for her conservative party by voters in Germany's most populous state, in the countdown to next year's national polls.

With about 16 months to go until she seeks a third term in office, Merkel must weigh up how to ensure a national victory for her Christian Democrats (CDU) as well as see through her eurozone crisis-fighting policy.

A snap vote in the state of North Rhine-Westphalia (NRW), Germany's most populous with 18 million people, handed her CDU party its worst ever result in the state, with just over 26 percent, according to preliminary results.

The main opposition Social Democrats (SPD) took 39 per cent in NRW, home to the Ruhr industrial heartland, and looks set to again form a state coalition government with the ecologist Greens, although, this time, with a majority.

A senior CDU official denied the party's heavy losses in NRW would impact its national policy.

Support for Merkel's drive for austerity and balanced budgets is "independent of this painful result from this regional parliamentary election," CDU General Secretary Hermann Groehe said, according to the German DPA news agency.

The NRW vote does not directly affect Merkel's national coalition and surveys have consistently indicated strong national support among German voters for her austerity drive in Europe and for her party.

However, the NRW defeat may bolster the opposition in its bid to force Merkel to soften her austerity policy and is a further setback after voters punished governments in fellow eurozone nations France and Greece that had toed the line for German-imposed budgetary belt-tightening.

And it came two days ahead of a highly-anticipated meeting in Berlin between Merkel and France's president-elect Francois Hollande who beat her centre-right ally on Europe, president Nicolas Sarkozy.

Socialist Hollande campaigned on a pledge to renegotiate the eurozone's fiscal pact, agreed in March, which binds member states to austerity measures and which Merkel argues is essential to underpin the continent's eventual recovery.

The SPD has echoed calls by Hollande to place more emphasis on growth in the fiscal pact and Merkel, who needs a two-thirds majority in parliament to ratify the fiscal pact, will therefore require opposition support.

Der Spiegel news weekly said the SPD now faces a dilemma.

"If it rejects the fiscal pact and the austerity policy, it is offering Merkel a nice little campaign issue... If it agrees with Merkel once again out of political responsibility, there is no clear distinguishing from the chancellor," it commented online.

The NRW poll had pitted the CDU's main contender Norbert Roettgen, who is also Merkel's environment minister, against the popular incumbent SPD state premier Hannelore Kraft.

Kraft had argued the need for public savings but also focused on jobs, education and nursery places, while Roettgen took aim at the SPD contender for clocking up public debt.

The election was triggered after the minority state government unexpectedly fell when the regional parliament failed to pass a draft budget after just 22 months in power.

Notching up a success in the vote was Merkel's pro-business coalition partners at federal level, the Free Democratic Party (FDP), which confirmed a reversal of its fortunes, after a string of humiliating defeats.

Hot on the heels of its better-than-expected result the previous Sunday in Schleswig-Holstein state, the FDP took about 8.4 percent, significantly better than the three percent it is polling nationally.

The Greens scored 11.5 percent, according to the preliminary results, while the upstart Pirate party continued its winning streak with more than seven percent.

This enables the party, which campaigns on a pro-transparency platform to enter the state parliament, its fourth entry into a regional parliament since September.

NRW historically plays a big role in federal politics -- in 2005, a lost vote in the state prompted then chancellor Gerhard Schroeder to call a snap federal election which saw Merkel wrest power from him.