"But you are right now employing Nazi measures", Erdogan said referring to Merkel, pointedly using the informal "you" in Turkish. "Your practices are not different from the Nazi practices of the past", he said.
Erdogan has dubbed Merkel and the Dutch government "fascists" and accused them of engaging in "Nazi practices" after both Germany and the Netherlands prevented campaign events for expatriate voters ahead of Turkey's referendum. The accusation follows a pro Kurdish rally in Germany Saturday that turned into a rally against the Turkish President.
"Against who? My Turkish brother citizens in Germany and brother ministers" who went to the country to hold campaign rallies for a "yes" vote in next month's referendum, he said. "When we call them Nazis they [European politicians] get uncomfortable". Would this suit the ethics of politics? "Your mission is not to support terrorist organisations, but to extradite them".
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Erdogan then dropped the hammer, "If they weren't ashamed, they would revive the gas chambers", he added as quoted by the Hurriyet Daily News.
The PKK has more than 14,000 followers in Germany among the Kurdish migrant population, and raised more than €13 million ($14.3 million) in 2015, according to reports by the German domestic intelligence agency, the BfV.
To become law, the bill would still need to be signed by the head of state.
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In early March, Turkey's Justice Minister Bekir Bozdag pulled out of a scheduled visit to Germany, after a small town in German south-western region of Baden-Wurttemberg denied him the chance to address his countrymen.
German Foreign Minister Sigmar Gabriel told Der Spiegel: "We are farther away than ever from Turkey's accession to the European Union".
Turkish authorities detained more than 2,000 people over the last week for suspected links to militant groups or last year's failed coup attempt, the interior ministry said on Monday.
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Turkey is voting on whether or not to extend Mr Erdogan's powers on April 16, and the president has criticised countries including Germany for not allowing his ministers to campaign on their soil for Turkish nationals' votes. Sunday, the German ambassador was summoned to the foreign ministry to receive an official condemnation. To hit back with strong verbal retaliation would mean "falling for Erdoğan's tactic", Schaefer said, stressing that Germany is "a strong, democratic country" that could handle such insults.