German state elections that dealt a heavy blow to the parties in Chancellor Olaf Scholz's government and historic wins for two anti-establishment parties are likely to aggravate instability in an already fractious ruling coalition.

With only a year to go before a national election in Europe's largest economy, Sunday's results look set to increase the pressure on Scholz to be tougher on immigration and intensify the debate over support for Ukraine as issues that dominated campaigning.

The German government's faltering authority could also complicate European policy when the bloc's other major power neighbouring France is still struggling to form a government after snap elections in June and July.

All three parties in the federal government looked to have lost votes in the elections in Thuringia and Saxony, according to early projections, which underscored the demise of Scholz's Social Democrats (SPD) as a big-tent party. The projections by pollster Forschungsgruppe Wahlen published at 9 p.m. (1900 GMT) put it on just 6-7.6% of the vote.

Junior coalition partners, the Greens and pro-business Free Democrats, were at risk of being evicted from the Thuringia state parliament for failing to meet the 5% threshold.

Analysts said the most likely impact of the results would be increased bickering within Scholz's ideologically heterogeneous coalition.

"For us it's going to be about asserting ourselves more strongly," Kevin Kuehnert, SPD party general secretary, said late on Sunday. "Not letting ourselves be led by the nose by parties that have just been kicked out of a state parliament."

The results reflect the growing fragmentation of the political landscape and rise of anti-establishment parties across Europe as governments have struggled to deal with crises including the Ukraine war and inflation.

The far-right Alternative for Germany (AfD) was the big winner of the evening, securing 33.2% in Thuringia in its first regional election yet, and also gaining almost as many votes as the conservatives in Saxony.

Meanwhile the leftist populist Sahra Wagenknecht Alliance (BSW), won more votes than all three parties in Scholz's coalition, gathering 11.5-15.6% of the vote just eight months after its founding.

The strength of these anti-NATO, anti-immigration and Russia-friendly parties will make forming ideologically coherent coalitions ever harder at both state and federal level.