German government ministers from a beleaguered junior coalition party sought to steal the limelight from euro sceptic rebels at a weekend conference and convince Chancellor Angela Merkel they can be a reliable partner.

The Free Democrats (FDP), who have suffered humiliating regional defeats and risk dropping out of parliament altogether at the next national polls, are riven by an internal referendum on whether to back a permanent bail out fund for the euro zone.

Economy Minister Philipp Roesler, the fresh-faced 38-year-old who became party leader in May in a so far unsuccessful bid to restore the FDP's fortunes, urged some 700 faithful gathered in Frankfurt to prove the party's ability to govern.

Let's put an end to the sadness, an end to the tears. It is time to put away the handkerchiefs, he said.

Failure to back the European Stability Mechanism (ESM) could tear a rift between the FDP and Merkel's conservatives.

Roesler said the party had to show it was about more than simply calling for lower taxes. He took a tough line on the euro zone debt crisis, calling for harsh sanctions for states that flout euro zone rules, but threw his backing behind the ESM.

Rebels have mounted a referendum among the party's 64,000 members on whether it should support the ESM. Results are due on December 17 and an indecisive vote could exacerbate the FDP's slide, although the vote is non-binding and would not stop the party's deputies from backing the new bailout fund in parliament.

Roesler's predecessor, Foreign Minister Guido Westerwelle, made a passionate appeal on behalf of Germany's duties to Europe, saying: Europe has its price, but is also has its value. Whoever forgets this is making a historical mistake.

FDP leaders seem sure they can win the referendum, but many in the party feel the result might be too close to call.

The FDP has been stuck at between 3 and 4 percent in opinion polls for most of 2011, raising the risk that it might fail to win the 5 percent minimum threshold to re-enter parliament.

Never before in post-war German history has a party fallen as far as fast as the FDP. After winning a record 14.6 percent in the 2009 election, the party failed to clear the 5 percent threshold in five of seven regional elections this year.

If you ask the people on the street, they can't tell you what the FDP really stands for. The party needs to ... talk with one voice, said FDP lawmaker Heinz Golombeck, who represents the southwestern city of Karlsruhe in the Bundestag.

The FDP has often served as kingmaker in German politics and has been in power longer than any other party in post-war history -- 43 years since 1949. But many now perceive it as too focussed on the interests of the wealthy.

I think we will reach the 5 percent threshold ... People will take pity on us, but it's likely we will have to wait ten years before we can govern again, said pensioner and party member Klaus Reimler.

(Writing by Alexandra Hudson; Editing by Ruth Pitchford)