Germany pledged an extra six billion euros Monday to help the record numbers of desperate refugees crossing its borders, with France vowing to take in 24,000 over the next two years.
Chancellor Angela Merkel said the scenes of spontaneous solidarity from hundreds of Germans who greeted families fleeing wars in Syria and beyond at railway stations with gifts and welcome signs were moving and "breathtaking".
"What we are experiencing now is something that will occupy and change our country in coming years," she said as French president Francois Hollande vowed his country would take a larger share.
Under pressure from Paris and Berlin, the European Union is readying fresh quotas that would see the two top EU economies take nearly half of the 120,000 refugees to be relocated under a plan by European Commission chief Jean-Claude Juncker.
In Paris, Hollande said France would take in 24,000 refugees over the next two years and proposed to host an international conference on Europe's worst refugee crisis since World War II.
"The issue of refugees and displaced people is first and foremost an issue that affects southern countries... It affects Africa, the Middle East but also other continents including Asia," the president said at his bi-annual press conference.
"We will propose to host an international conference on refugees in Paris." Juncker will unveil proposals for mandatory quotas on Wednesday.
"Since the beginning of the year, 350,000 people have crossed the Mediterranean to reach Europe," Hollande told reporters.
"It's a tragic and serious crisis. It can be brought under control and it will be."
Thousands of refugees welcomed by locals in Germany, Austria
According to Juncker's proposal for mandatory quotas for EU states which is set to be unveiled Wednesday, Germany would take 31,443 and France 24,031, to relieve the burden on Greece, Italy and Hungary, a European source told AFP.
Spain would take 14,931 under the plan, the source said.
Migrant numbers have spiked since Friday, when Austria and Germany threw open their borders and eased travel restrictions to allow in thousands who had made it to Hungary, which has balked at the influx.
Merkel's government — which expects to accept 800,000 asylum-seekers this year, four times last year's total -- earmarked the additional six billion euros ($6.7 billion) to house and feed the newcomers for the next year.
"In these weeks and months, Germany is the destination for an unprecedented number of refugees who are seeking protection from war, persecution and distress," the ruling coalition said after overnight talks.
Hundreds of refugees and their children again sat on blankets and suitcases early Monday outside Berlin's refugee registration centre in scenes repeated across the country.
But the government hailed the "wave of solidarity" that Germans were showing and said the country's economic strength would enable it to meet the challenge.
Germany, Europe's biggest economy, has taken in by far the EU's largest numbers of refugees -- but it has also spearheaded a push for fairer burden sharing across the 28-country community.
Merkel was to meet Serbian Prime Minister Aleksandar Vucic later Monday, whose country is a key staging post on the Balkans refugee route to western Europe.
But with Europe deeply divided on how to deal with the crisis, the UN's refugee chief said the crisis could be "manageable" if European countries all pulled their weight and agreed on a common approach.
"The European asylum system is deeply dysfunctional, it works badly," UN refugee chief Antonio Guterres told French broadcasters.
"Some countries make the necessary effort, and the effort of many others is nearly non-existent."
He said the situation could be tackled "if everyone agrees on a joint action plan."
'Christian fortress Europe'
Turkish Prime Minister Ahmed Davutoglu, which has borne the largest burden of refugees fleeing neighbouring Syria, lashed out at the "ridiculously small" share EU countries were accepting.
Writing in Germany's Frankfurter Allgemeine Zeitung, he hit out at "Christian fortress Europe" pointing out that Turkey had already taken in more than two million people from war-torn Syria and Iraq.
His remarks came just days after Hungary, which is building a fence to keep out migrants after some 50,000 new arrivals in August alone, raised the alarm over the impact of mainly Muslim refugees on Europe's "Christian culture".
Pope Francis urged a different approach in a Sunday sermon, urging "every parish, every religious community, every monastery, every sanctuary in Europe" to take in a family.
"Faced with the tragedy of tens of thousands of asylum-seekers fleeing death (as) victims of war and hunger who are hoping to start a new life, the gospel calls on us to be the neighbour of the smallest and the most abandoned."
The Vatican's two parishes would take in two refugee families "in the coming days", he said, setting an example for more than 50,000 other parishes across the continent.
The human cost of Europe's refugee crisis was brought into sharp focus by pictures of a Syrian toddler found dead on a Turkish beach last week.
Italian Prime Minister Matteo Renzi pointed to a picture of the drowned Syrian child, and said there were "thousands like him", in a passionate speech Sunday to members of his Christian Democratic party in Milan.
"We need rules, we cannot take in everyone," said Renzi. "But nothing will ever stop us trying to save a life whenever possible. This is our challenge."