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LONDON (Reuters) - German Chancellor Angela Merkel said on Wednesday she would help Prime Minister David Cameron tackle abuses of Britain's welfare system by EU migrants but insisted the bloc's principle of freedom of movement should not be touched.
Cameron, whose Conservatives are losing support to the Eurosceptic UK Independence Party (UKIP) before an election in May, was due to raise his proposals on reforming the European Union during a meeting with Merkel in London to discuss Germany's presidency of the G7.
Cameron wants to renegotiate ties with the EU before a referendum on Britain's membership of the bloc that he has promised by the end of 2017 if his party is still in power.
With immigration among voters' top concerns, Cameron has made controlling the flow of EU citizens to Britain a central part of this effort. UKIP and some Conservatives say Britons fear that workers from poorer member states are depressing wages, while others may be coming to collect more generous welfare entitlements than back home.
But while Merkel is sympathetic to cracking down on any welfare abuse by migrants, she has repeatedly made it clear she does not want to dilute the right of EU workers to seek employment wherever they want in the 28-nation union.
"We have no doubt about the principle of freedom of movement being in any way questioned," Merkel said at a joint press conference before a dinner with the British leader to discuss EU reform and Russia's actions in Ukraine.
"We are looking at the legal (aspect) and we are looking at legislation here ... abuse needs to be fought against so that freedom of movement can prevail."
Cameron has stopped short of proposing a cap on the number of EU citizens coming to Britain but wants to curb EU migrants' access to welfare payments, including making them wait four years before being allowed to access benefits.
"One has to take a very close look at the social security systems of individual member states ... and to what extent they have to be adjusted. And that's something we need to address," Merkel said.
If implemented, Cameron's proposals -- which he described on Wednesday as "sensible and practical" -- would affect over 400,000 EU migrants, many of them working in low-wage jobs.
As the leader of the EU's most powerful state, Merkel's backing will be crucial if Cameron is to have any hope of getting the EU to agree to his proposals.
"I welcome very much the chancellor's willingness to work with us to find solutions," Cameron said at the press conference. "I want to fix the problems in Britain's relationship with the EU ... I am convinced this can be done."
Merkel also faces a Eurosceptic challenge at home, with the anti-EU Alternative for Germany (AfD) soaring from nowhere to around 7 percent in national opinion polls in less than two years. However, she has chosen to ignore rather than directly challenge the AfD in the hope that it will burn itself out.
A senior German official underlined this policy. "There is a feeling that too many concessions are being made to the Eurosceptics. We have had experience in Germany with parties like (UKIP) and the view is that if you try to give them something, you only dig yourself in deeper," the official said before Merkel's visit, speaking on condition of anonymity.
Cameron, who favors staying in a reformed EU but has warned he will "rule nothing out" if he cannot get the changes he wants, has said his plans will require changes to EU treaties.
While the EU has made it clear it would like Britain to remain a member and will listen to its concerns, it is also not ready to go to any lengths to stop Britain leaving.
"It would be a very hard blow for the EU if Britain left, but it would be a worse blow for Britain," said the German official.
Ahead of her visit Merkel and Cameron released a joint statement saying more needed to be done to make the EU more stable and competitive, and they hoped to seal a free trade deal between the EU and the United States this year.
The pair also discussed the Ebola crisis in West Africa, and a militant attack on the Paris offices of a weekly satirical magazine in which at least 12 people were killed.
The leaders were briefed together by British intelligence officials, a step Merkel said showed the importance of international cooperation in tackling the global terror threat.
Additional reporting by Noah Barkin, Andreas Rinke and Erik Kirschbaum in Berlin; Editing by Andrew Osborn and Ruth Pitchford