German Social Democrat leader (SPD) Martin Schulz stepped down with immediate effect on Tuesday and said the party's committee had backed parliamentary floor leader Andrea Nahles as his successor.
The embattled leader of the SPD suddenly gave up plans to become the next foreign minister on Friday, hoping to shore up support among SPD members for a new coalition with Mrs. Merkel's Christian Democrats.
Schulz has been troubled with criticism from within the SPD, especially the youth branch of the party which has been fervently against a coalition deal with Merkel.
The SDP's former leader said the coalition agreement was "70 percent" Social Democratic policy and encouraged party members to bring "the personnel debate to an end" with his resignation and concentrate on passing the deal.
Andrea Nahles, a plain-speaking 47-year-old former labor minister with a left-wing slant and strong oratory skills, will become Schulz's successor.
The SPD disagrees over the coalition deal and the division of ministerial posts. After the deal was declared, Schulz declared that he would step down following the members' vote, but later dropped that plan amid controversy. If members reject the coalition, Merkel's only realistic options would be to set up a minority government or seek fresh elections.