The massive increase in immigrants, refugees and asylum seekers was the focus of Friday's session in the Bundesrat, the upper house of the German parliament.

The number of refugees seeking residence in Germany has jumped by 64 percent to over 127,000 since 2012. Although they are distributed across states based on the region's population and tax revenue, many local governments have struggled to finance sufficient housing and care. The figure is expected to reach 200,000 by the end of this year.

Beginning on January 1 under the new agreement, Berlin will provide each of Germany's 13 states with up to 500 million euros ($622 million). The loan will be for 2015 and 2016 and each state must give half of it back to the federal government within 20 years.

Ahead of the announcement, center-left Social Democratic politician Stephan Weil characterized the agreement moving in the right direction.

"I see it as the government's entry into a continuous role in this national task," Weil told reporters.

Better benefits for foreigners

The Bundesrat also approved other measures on Friday involving foreign employment in Germany.

In 2012, Germany's top court ruled that refugees receiving long-term unemployment benefits should receive more money. The gap between their benefits and those of a German citizen's - estimated at 40 percent - was deemed "unconstitutional."

The Bundesrat agreed to raise the aid to 352 euros a month, which still falls behind the Hartz-IV threshold of 399 euros.

It also moved forward on measures to combat the abuse of the social welfare system.

The Bundesrat voted in favor of a bill which requires migrants to find employment within half of year. Under the measure, EU migrants guilty of social welfare fraud can also be barred entry from the country or given jail time.

Germans fearful of a rise in immigration have often pointed to the attraction of the country's social welfare benefits for foreigners. However, a study published by the Bertelsmann Foundation this week pointed out that the 6.6 million immigrants working in Germany were responsible for an annual social welfare fund surplus of 22 billion euros ($27.4 billion).

kms/shs (AFP, Reuters, dpa)