Migrants Hungary EU fence
Hungarian police watch as Syrian migrants climb under a fence to enter HungaryLaszlo Balogh/Reuters

German Chancellor Angela Merkel has suggested for the first time that passport-free travel across mainland Europe under the Schengen zone cannot continue in its current form and that the EU may bring back border controls.

The current migrant crisis, which has been described as the biggest since the second World War, is causing a strain in east and west Europe, as they battle over how to handle the massive influx of migrants descending into the EU.

Merkel has taken eastern European states to task for their reluctance in accepting Muslim asylum seekers. "I believe that our values in Europe are based on the dignity of every individual, without starting to say - 'we don't want Muslims, we are a Christian land'," she said, according to the Financial Times.

She warned Germany's eastern neighbours that the EU's prized passport free-zone was at risk unless they took on more refugees. The refugees, many fleeing war zones in the Middle East, have been crossing the Mediterranean and Aegean in the hundreds of thousands in recent months.

The FT notes that the ultimate destination of the migrants is often the economically prosperous countries in the north.

Merkel warned eastern member states that the Schengen Area was at risk if the EU could not agree on a fair distribution of refugees, urging Europe to collectively accept responsibility in hosting refugees.

A total of 26 European countries come under the Schengen agreement which eliminates passport and immigration controls at their joint borders. The UK is not part of this arrangement.

Germany is expected to take in 800,000 asylum seekers this year, equivalent to around 1% of its total population, or four times the total taken in last year, the FT noted.

Majority of refugees are economic migrants, says Slovakia

Slovak Prime Minister Robert Fico however reacted strongly to Merkel's comments, accusing European leaders of not "telling the truth" about the background of the majority of migrants. "Ninety-five per cent of these people are economic migrants ... We will not assist this foolish idea of accepting anybody regardless of whether or not they are economic migrants," he said.

France's Foreign Minister Laurent Fabius slammed Budapest on Sunday, describing as "scandalous" the response of central and eastern European countries to the migrant crisis.

Hungarian officials however dismissed Fabius's comments. "It's strange that French authorities are criticising the border fence when they are building their own wall at Calais, " said Levente Magyar, state secretary at the Ministry of Foreign Affairs.

The Telegraph noted that Merkel's statement on the possible re-introduction of border controls could benefit UK Prime Minister David Cameron's attempts to reform the European Union as both would require major treaty changes.

Cameron is seeking to deter welfare tourists from coming to Britain by stopping EU migrants claiming benefits for the first four years they are in the UK and this requires a treaty change.