Berlin  - German Chancellor Angela Merkel denied Thursday any bias in plans to spend billions of euros on repairing roads and schools to jolt the flagging economy back to life.

The funding, for projects which have already been waiting approval, would be spread fairly to all regions, she said after meeting premiers of the 16 states.

Merkel had triggered a cry of protest when she said in an interview this week that it was time to help western Germany, 19 years after massive federal spending started to modernize formerly communist eastern Germany.

It has been an unwritten rule in German politics to avoid comparing 1970s and 1980s facilities in the West with the East's fast roads, restored town centres and new industrial estates. Poverty remains common in the East.

"This is not a programme that favours the East," Merkel said in Berlin, while saying it was not true either that she was no longer trying hard enough to help the East.

Merkel has committed herself to infrastructure spending, arguing that it is surer way of stimulating the economy than giving tax handouts. She says Germans are more likely to hoard handouts as savings, not spend them.

Her stance has come under fierce criticism internationally. Other governments say it is important to boost consumer spending as well as public investment.

The Christian Social Union (CSU), the counterpart in Bavaria to Merkel's Christian Democratic Union (CDU) in the other 15 states, stepped up a demand for tax cuts and threatened to veto Merkel's spending plans.

"We won't vote for a new stimulus that lacks tax cuts," said Peter Ramsauer, leader the CSU parliamentary bloc in the German parliament. His party is part of the Merkel coalition.

But Merkel declared herself unimpressed.

"When we set off the second round of stimulus in January, everyone will vote for it," she told reporters. (dpa)