Angela Merkel is set for crucial new talks in her latest bid to form a government, more than 10 weeks after Germany went to the polls.
Europe’s largest economy has been without a stable government since the election in September produced no overall majority, forcing the German Chancellor to seek an alliance with an unlikely group of parties.
Talks with the Greens and pro-business Free Democrats (FDP) collapsed last month following four weeks of negotiations, raising doubt about Mrs Merkel’s future after 12 years in power.
Now Martin Schulz, the leader of the Social Democrats (SPD), says he will discuss a coalition with Mrs Merkel’s Christian Democratic Union (CDU) on Monday if he is given the go-ahead by his own party over the weekend.
It raises hopes that the two parties, which both suffered election losses to the far right, could renew an alliance that has ruled Germany since 2013.
Mr Schulz told reporters: “We’ll explore whether and how the formation of a government is possible in Germany.”
Mrs Merkel’s conservatives lost support to the Alternative for Germany (AfD) far-right party in September’s federal election because of anger at her decision in 2015 to open the country’s door to more than a million asylum seekers.
After her party’s election losses, Mrs Merkel reluctantly accepted a demand by her arch-conservative CSU allies to put a limit on the number of asylum seekers Germany will accept each year.
The centre-left Social Democrats have set down demands for coalition talks, including opposing a conservative plan to extend a ban on the right to family reunions for some asylum seekers.
The SPD suffered its worst election result in post-war history and had been reluctant to join another “grand coalition”.
But it dropped its pledge to go into opposition only after Mrs Merkel failed to form a government, bowing to pressure from President Frank-Walter Steinmeier to unwind the impasse.
The SPD will hold a party congress in Berlin this weekend, where it is expected to debate its position on coalition talks.