BERLIN (Reuters) - Europe should work with Libya to control illegal migration, but cannot sign a deal similar to that reached with Turkey last year until political stability is restored in the North African country, German Chancellor Angela Merkel said on Saturday.

Merkel said it was important to work with Libya given that more than 4,000 migrants had died in the Mediterranean while en route from Libya to Italy.

"At the moment we cannot sign an agreement like that concluded with Turkey," she said in a video podcast, adding that such an accord would only be possible when "the political situation has improved, when the unity government is really a unity government and has control over the entire country, and we can talk about human rights issues, standards and other issues."

Libya sank into chaos following the 2011 overthrow of veteran ruler Muammar Gaddafi, and the new U.N.-backed government in Tripoli exercises no control over its territory.

The sea crossing from Libya to Italy, operated by people-smugglers based in the North African country, is now the main route for migrants bound for Europe.

A record 181,000 mainly African boat migrants reached Italy last year, taking the total number of arrivals in the past three years to more than half a million.

European Union leaders, who will meet in Malta next week, are looking at new proposals to handle asylum seekers after more than a year of wrangling over the issue that has undermined the bloc's unity.

EU interior ministers on Thursday already pushed ahead with plans to finance camps in Africa, where the U.N. refugee agency and aid groups would process migrants to prevent them from trying to cross the Mediterranean to Europe.

(Reporting by Andrea Shalal and Gernot Heller; Editing by Helen Popper)