Top officials from German Chancellor Angela Merkel’s Christian Democrats (CDU) last night agreed to pursue a "grand coalition" with the country's second-largest party, a move that would avert fresh elections.
The Social Democrats (SPD) signalled last week they were prepared to entertain forming a similar coalition to that which has governed for the last four years.
Such a move, a reversal of the SPD's previous position, followed the breakdown of plans for a three-way coalition between the CDU, pro-business FDP and Greens.
CDU leaders convened at Adenauer-Haus from 6pm to consider an accord with SPD, according to local German media reports.
"We have the firm intention of having an effective government," Daniel Guenther, conservative premier of the state of Schleswig Holstein, told reporters after a four-hour meeting of leading members of Merkel's party.
"We firmly believe that this is not a minority government but that it is an alliance with a parliamentary majority. That is a grand coalition," he said.
Earlier in the day, one of Merkel's most important allies threw his weight behind plans for a grand coalition to unlock the political deadlock.
Horst Seehofer, the Bavarian prime minister and head of the CSU, said an alliance with the SPD was "the best option for Germany".
The CSU is the Bavarian sister party of Merkel's Christian Democrats (CDU).
Seehofer told German newspaper Bild am Sonntag that an alliance with the SPD was "better anyway than a coalition with the Free Democrats and Greens, new elections or a minority government".
European leaders have stressed the importance of Germany getting its political house in order ahead of the European Council summit in December. Merkel has previously stressed an acting government is able to lead the country on the international stage until a new coalition is finalised.