Germany’s political crisis arose in September when Chancellor Angela Merkel's conservatives and junior coalition partner SPD lost votes as the anti-immigrant AfD surged into parliament.
German Chancellor Angela Merkel said on Saturday she aimed to get a government in place as quickly as possible after she was left scrambling to find a way to govern when three-way coalition talks collapsed last Sunday.
"Europe needs a strong Germany, it is desirable to get a government in place quickly," Merkel told a party meeting, adding, however, that her acting government was able to carry on day to day business in Europe's biggest economy.
She added she was prepared to talk to the Social Democrats (SPD) after the centre-left party reversed an earlier decision and said it was prepared to talk to Merkel's conservatives, but she stressed any talks should be based on mutual respect.
The about-turn by the SPD, which had said it would go into opposition after suffering its worst result in 70 years in September's election, could help avert a disruptive repeat vote in Europe's economic and political powerhouse.
SPD leader Martin Schulz told a news conference on Friday the party leadership had reached the decision out of a sense of responsibility to Germany and Europe after Merkel's attempt to form a government with the pro-business Free Democrats and environmental Greens smaller parties collapsed.
"There is nothing automatic about the direction we are moving in," Schulz said. "If a discussion results in us deciding to participate, in any form whatsoever, in the formation of a government, we will put it to a vote of party members."
Schulz told 300 members of the party's youth wing - who rejected another "grand coalition" at a conference in Saarbruecken - that nothing had been decided.
But he suggested that governing could offer better chances to achieve his primary goal of improving the lives of people in Germany and around the world.
"From which position is that best possible? What is more important? The radiance of our decisions, or the improvement of the everyday lives of people?" Schulz told the group.
He said he noted the group's position and thanked them for their support in the September election. But he said he expected their loyalty and "constructive cooperation" with whatever path was ultimately decided by the party's leadership.
Over her 12 years in power, Merkel has embraced a succession of coalition partners who then went on to suffer painful electoral defeats.
German President Frank-Walter Steinmeier will host a meeting with Schulz, Merkel and Horst Seehofer, leader of the CDU's arch-conservative Bavarian sister party, next Thursday.
Steinmeier, a former SPD foreign minister, has urged his former party to reverse its pledge to go into opposition, having made clear that he saw fresh elections as a last resort.