Merkel, speaking after two days of hastily arranged meetings in Kiev and Moscow, also bluntly underlined her opposition to the idea of supplying lethal weapons to the Ukrainian government.
Merkel offered no details of the proposals that have been thrashed out over recent days, which she plans to discuss in a phone call tomorrow with Russian President Vladimir Putin, Ukrainian President Petro Poroshenko and French President Francois Hollande.
More than 5,300 people have been killed since fighting began in April, according to a UN tally, and the bloodshed has markedly increased over the past two weeks.
The resurgent fighting has prompted the US to consider giving lethal weapons to Ukraine, an option opposed by European nations.
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Negotiators' aim is to draw up a possible joint document on implementing the much-violated September peace deal concluded in Minsk, Belarus.
"This conflict cannot be resolved by military means," Merkel said at the Munich Security Conference. "It is all the more important now to set out substantial steps that serve to fill with life the Minsk agreement."
The German leader acknowledged that experience to date of agreements being violated on the ground has been "disillusioning."
Asked whether there are any guarantees a new agreement won't suffer the same fate, she replied that "there are no theoretical guarantees."
"After such experiences, I am very cautious with guarantees," she said. "The guarantee can only be keeping to what has been agreed ... But the answer can't be not to make any more agreements. Of course we have to try again and again, at least I think so."