French President Emmanuel Macron, German Chancellor Angela Merkel and President Donald Trump attend a commemoration ceremony for Armistice Day. Photo / AP
Angela Merkel called for the creation of a "real, true" European army during a speech to EU ministers on Tuesday in a rebuke to President Trump.
The German Chancellor also called for a European Security Council that would be responsible for coordinating defence policy across the continent, the Daily Mail reported.
Merkel spoke out after French President Emmanuel Macron floated the same idea last week, and hours after Donald Trump lambasted him for it on Twitter.
Emmanuel Macron suggests building its own army to protect Europe against the U.S., China and Russia. But it was Germany in World Wars One & Two - How did that work out for France? They were starting to learn German in Paris before the U.S. came along. Pay for NATO or not!
Trump joked that Parisians "were starting to learn German before the US came along" in the Second World War and told EU leaders pay their fare share to NATO.
In her speech, which was about the future of the EU, Merkel said: "What is really important, if we look at the developments of the past year, is that we have to work on a vision of one day creating a real, true European army.
She said the new army would work in conjunction with NATO, but added that "only a stronger Europe is going to defend Europe".
"Europe must take our fate into our own hands if we want to protect our community," she said.
The remark drew widespread applause and a smattering of boos from watching lawmakers.
Macron made the same suggestion last week in an interview with TV station Europe 1 when he spoke about Russian aggression and Trump's decision to withdraw from a key Cold War missile pact.
He said: "I believe in the project of a sovereign Europe. We won't protect Europe if we don't decide to have a true European army.
"We have to have a Europe that can defend itself alone - and without only relying on the United States in a more sovereign manner.
"We should protect ourselves when it comes to China, Russia and even the United States of America."
That last remark angered Trump, who met with Macron on Friday last week and tweeted before the meeting: 'President Macron of France has just suggested that Europe build its own military in order to protect itself from the US, China and Russia.
"Very insulting, but perhaps Europe should first pay its fair share of NATO, which the US subsidizes greatly!"
The French government insists that Macron meant Europe needs to protect itself from decisions the US makes - such as withdrawing from the missile treaty - and not from an invasion, though Trump seems to have interpreted it differently.
Shortly before Merkel spoke, Trump rekindled the feud on Twitter, writing: "Macron suggests building its own army to protect Europe against the US, China and Russia.
"But it was Germany in World Wars One & Two - How did that work out for France? They were starting to learn German in Paris before the US came along.
Trump also bashed Macron for his low approval rating in France and being unfair to the US on trade.
The spat marks a major falling-out for the two world leaders, who had previously shared a friendship which made Macron Trump's closest ally in Europe.
Macron and Merkel's comments come against a backdrop in which Trump has questioned the purpose of NATO and stoked fears that America might fail to honour its key common defense clause.
At times during his Presidency, Trump has hinted that America could renege on the pledge, which states that an attack on one member state is an attack on all.
His most recent comments came in July this year, shortly after a summit with Putin in Helsinki, in which he bemoaned Montenegro becoming part of the alliance.
Speaking to Fox News's Tucker Carlson, he said: "Montenegro is a tiny country with very strong people... They're very aggressive people.
"They may get aggressive, and congratulations, you're in World War III."
Just before the Putin summit, Trump had attended a NATO summit in Brussels in which he arrived late, left early, and refused to sign a joint statement with the rest of his allies.
He also blasted leaders for failing to meet spending targets while suggesting a January deadline for doing so, with possible US withdrawal if they failed.
Trump said afterwards that European leaders had caved in to his demands to meet a 2 per cent spending minimum quicker than planned, amid denials from others, including Macron.
Chief UK Eurosceptic Nigel Farage, who is a member of the EU parliament, also attacked Mrs Merkel's speech on Tuesday.
Speaking to the parliament, he said: "The European project was set up to stop German domination, and what you've seen today is a naked takeover bid."
Referencing remarks by Finance Minister Bruno Le Maire, he added: "This is a European Union that wants to become an empire, a militarized European Union.
"An undemocratic European Union, a European Union that seeks to continually expand to the east, a European Union that has launched a new Cold War against the United States of America."
Merkel announced her retirement from politics earlier this month, but will remain as Chancellor - and de-facto head of Europe - until her current terms ends in 2021.