As Social Democratic party official said Tuesday, Germany's two biggest parties, Chancellor Gerhard Schroeder's centre-left Social Democrats and conservative challenger Angela Merkel's Christian Democrats, will meet for coalition talks on Thursday.
The two parties combined would have enough votes to form a clear majority government, but would have to overcome differences on policy and principles.
A Social Democratic official who declined to be identified because of the sensitivity of the issue, confirmed the meeting would take place after both parties met with their traditional allies first.
A Christian Democratic official, also speaking on condition of anonymity, confirmed talks with Social Democrats this week but did not specify a day.
The news came as two prominent politicians from the left and right indicated that such a "grand coalition" would be the best way out of Germany's political muddle.
But they disagreed on Merkel and Schroeder's clashing claims to become chancellor. Voters ousted Schroeder's ruling coalition of Social Democrats and Greens on Sunday, but withheld a majority from the Christian Democrats and their partners, the pro-business Free Democrats. The result has been a confused scramble for power.
Meanwhile, Merkel moved to shore up support in her own disappointed party ranks before going ahead with coalition talks later this week, asking the Christian Democrats to re-elect her as the party's leader in parliament, the AP reports.
The vote comes after the party turned in a disappointing result under her leadership in the campaign against Schroeder, barely finishing first, 35.2 per cent to 34.3 per cent. She earlier had led by up to 20 points.
Seeking re-election was a preliminary test of strength, and she was expected to run unopposed. The Social Democrats also scheduled a vote on their parliamentary leader, Franz Muentefering, also unopposed.