Angela Merkel's liberal refugee policy is believed to be a key reason for her party's loss in this election. Photograph: (Reuters)
The defeat could weaken the German Chancellor's chances of a fourth term in next year's federal elections
German Chancellor Angela Merkel's Christian Democrats stood third, after being defeated by the anti-immigrant and anti-Islam Alternative for Germany (AfD) party in a north-eastern state election on Sunday, according to TV exit polls.
Merkel's Christian Democratic Union garnered just 19 percent percent in its worst ever score in the north-eastern state.
The defeat has come for Merkel in her home district and could weaken her chances of a fourth term in next year’s federal elections.
The AfD took 21.9 per cent of the vote behind the centre-left Social Democrats (SPD) in their first election in Mecklenburg-Vorpommern by campaigning hard against the chancellor's policies on refugees, according to a projection by ARD TV at 1815 GMT.
"This isn't pretty for us," said Michael Grosse-Broemer, one of Merkel's top deputies in parliament in Berlin in a ZDF TV interview. "Those who voted for the AfD were sending a message of protest."
The SPD has dominated the rural state on the Baltic coast with the CDU as junior coalition partners since 2006. It won 30.2 per cent of the vote, down from 35.6 per cent in the last election in 2011.
Merkel's approval rating has gone down to a five-year low of 45 per cent, down from 67 per cent a year ago, due to increasing dissent with her open-door policies on refugees. Her decision has left her isolated in Europe, and exposed her to heavy criticism at home, including from her own conservative allies.
Support for Merkel has also weakened after a string of violent attacks on civilians in July, three of which were carried out by asylum seekers. Of those, two were claimed by Islamic State.
According to a report in Der Spiegel magazine, Merkel wanted to announce her intention of running for a fourth term this year but has put that on hold due to resistance from her Bavarian sister party, the Christian Social Union.
"This was a dark day for Merkel," Thomas Jaeger, a political scientist at Cologne University, told Reuters. "Everyone knows that she lost this election. Her district in parliament is there, she campaigned there, and refugees are her issue."
"This is a slap in the face for Merkel -- not only in Berlin but also in her home state," said Frauke Petry, co-leader of the AfD.
"The voters made a clear statement against Merkel's disastrous immigration policies. This put her in her place."
The leader of France's far-right National Front party, Marine Le Pen, posted on Twitter:
"What was impossible yesterday has become possible: the patriots of AfD sweep up the party of Ms Merkel. All my congratulations!”
The SPD (26 seats) and the CDU (16) won enough seats to be able to continue their coalition in Mecklenburg-Vorpommern, with the AfD as the second-largest bloc in the 71-seat state assembly with 18 seats.
The SPD, which could also form a coalition with the Left Party, said it was leaving its options open.
The AfD is also gaining nationwide, a new poll showed on Sunday.
(WION with inputs from agencies)