The German federal government has promised to make a one-off payment of 4.1 billion euros ($4.6 billion) by next year to its 16 regional states coping with the influx of refugees, Reuters reported on Thursday.
The German government had previously promised to help the regional states with 3 billion euros over next year to cover the extra costs of housing and for care of the refugees seeking for asylum.
Chancellor Angela Merkel held a meeting with the 16 state's officials to discuss alternative methods of aid for the states, that are struggling to look after 800,000 asylum seekers expected this year alone.
She insisted that "the opportunities are much bigger than the risks."
German public opinion was divided concerning the increasing numbers of refugees fleeing from the Middle East and African countries on how they can be integrated.
On Wednesday, Bundesbank President Jens Weidmann, said the large influx of refugees imposed a great challenge, but could help Germany overcome risks on its development from the ageing population.
"If we succeed integrating those who are allowed to stay, we can reap long term benefits," Weidmann said.
Merkel and Finance Minister Wolfgang Schaeuble aimed to achieve a suitable budget this year and next year but some lawmakers have asked on whether the German government can achieved the goal by next year amid the rising costs.
Earlier on Thursday, Merkel told the German parliament that, the European union needs support from countries like United States, Russia and other Middle east countries in tackling the influx number of refugees fleeing into Europe.
Earlier on Thursday,the EU pledged to give 1 billion euros to humanitarian agencies to aid refugees in camps near their home countries.
The European Council President Donald Tusk claimed after Wednesday's emergency summit that the "greatest tide of refugees and migrants is yet to come."
"We should be talking about millions of potential refugees," he said, adding "we need to correct the policy of open doors and windows."