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German Family Minister Manuela Schwesig attends a news conference in Berlin, Germany, July 13, 2016. REUTERS/Hannibal Hanschke

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BERLIN (Reuters) - Germany's Social Democrats say they will make aid for families a central issue in next year's election if Chancellor Angela Merkel's conservatives block their proposals for higher children's allowances and subsidies for working parents.

Family minister Manuela Schwesig, a Social Democrat, told the Bild am Sonntag newspaper she was continuing to push for 1 billion euros (839.08 million pounds) in subsidies to help working parents cut their hours. The plan is opposed by Merkel's Christian Democrats, the senior partner in the ruling coalition.

Both parties are gearing up for next year's national election in which Merkel, in power since 2005, may seek a fourth term. The chancellor's popularity has dipped to a five-year low over her handling of the refugee crisis, and the right-wing, anti-immigrant Alternative for Germany (AfD) party was expected to make big gains in a state election on Sunday.

Schwesig said she was also pressing the government to spend about 100 million euros a year more to expand the current children's allowance or Kindergeld to include children above the age of 12 and eliminate a six-year limit on the money.

She said she would submit a legislative proposal before the next election.

The Christian Democrats have blocked those measures as well as increased funding for child-care centers, despite a healthy surplus in government coffers, Schwesig said.

"I will not give up. There is a huge demand," she told the paper. "If they continue to stonewall, the SPD will make this one of their key demands in the national parliamentary elections," she said, adding that Merkel and other key conservatives would then "have to explain why they aren't helping families."

Divisions in the ruling coalition have become more pronounced in recent months amid growing discord over Merkel's open-door refugees policy, Germany's relations with Russia and other issues such as trade.

Germany has sought for years to adopt more family-friendly policies to boost its birth rate, which has edged higher in the past two years due to migration, but remains far lower than the number of deaths each year.

The number of births rose 3.2 percent to 737,630 in 2015, but that is still way below the 905,675 recorded in 1990 and about half the peak of 1.4 million in 1964.

Schwesig said her proposal would give a subsidy of 150 euros a month for two years to each parent in a two-parent household if both reduced their work hours to 80 percent. The measure would ease child-care burdens and help improve gender equality, she said. Single parents would also get 300 euros a month.

The measure would help parents to continue working after having children, boosting tax revenues and other government revenues, Schwesig said.

(Reporting by Andrea Shalal; Editing by Mark Trevelyan)

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