Germany’s long wait for a new chancellor is coming to an end after sources from both the Social Democrat and Christian Democratic Union parties said on Monday that Angela Merkel is set to become Germany's first female chancellor, and the first to have been raised in the former communist east, under a deal struck with the SPD.

A Social Democrat spokesman told reporters that Gerhard Schröder's party had agreed that Merkel should replace the incumbent as chancellor at the head of a coalition government. The spokesperson said party members had approved by a large majority the deal that would make Merkel the first female chancellor in German history.

The CDU later formally approved the deal making Merkel chancellor at the head of a coalition government with the Social Democrats. A source within the CDU told AFP the party leadership "unanimously" supported the agreement

Merkel should be formally voted into office by parliament after the conservatives (CDU/CSU) and Social Democrats have thrashed out a coalition program and this has been approved by both parties, probably next month.

CSU leader Stoiber to be economics minister

The discussions which began at 11:00 UTC on Monday lasted only 20 minutes before news of a deal began to leak out. Appointments to government positions soon followed with Christian Social Union leader Edmund Stoiber being among the first. The soon-to-be former Bavarian state premier will take over as economics minister.

Norbert Lammert, the CDU's cultural affairs spokesman and deputy parliamentary president until now, will reportedly succeed Wolfgang Thierse in Germany's second-highest office to become president of parliament.

Specualtion is still rife concerning the other government posts up for grabs with conflicting reports circling about who will be the next interior minister.

DPA news service reports that Wolfgang Schäuble is set for the job, a position in which he has already served in between 1989 and 1991. But according to Reuters news service, Economic Ministers Wolfgang Clement said that Bavarian Interior Minister Günther Beckstein is slated to become the next German interior minister. This would mean that Erwin Huber, Bavarian Premier Edmund Stoiber's chief-of-staff, would become the new state premier.

Apart from Wolfgang Schäuble as a possible interior minsiter, CDU insiders have also mentioned a few other names for future ministers, according to DPA.

Lower Saxony's family minister Ursula von der Leyen would take that post on the federal level; the former education minister from Baden-Württemberg, Annette Schavan, would also take that post in Berlin. Norbert Röttgen has been named as Merkel's possible chief-of-staff while CDU secretary general Volker Kauder would replace Merkel as parliamentary leader of the CDU/ CSU group. Former health minister Horst Seehofer could become consumer protection minister.

The CDU and its Bavarian sister CSU would have eight cabinet posts -- Merkel as chancellor, a minister of state at the chancellery, and the economy, interior, defence, agriculture, education and family ministries.

The reports also suggested that the Social Democrats would also be allocated eight ministerial posts in the new government, giving them control of the foreign, finance, justice, labor, health, transport, environment and international development ministries.

Germany's next foreign minister is set to be Peter Struck, who is currently at the defence ministry, according to sources close to the Social Democrats. Struck will replace Joschka Fischer, figurehead of the Greens who had been at the foreign ministry since 1998, the sources told AFP.

They were unable to say immediately if Struck would also be named as vice chancellor, a position traditionally given to the foreign minister.

Schröder drops strong hint on retirement

While there has been no word as to what role, if any, Gerhard Schröder would take in a grand coalition, it was muted that he could have been given the role of foreign minister. Schröder, however, recently responded angrily to this offer branding it a “personal insult.”

However, according to a report in Passauer Neue Presse newspaper, Schröder has announced that he will not have any part in a new government. "I have a different plan for my life," Schröder told his likely successor, Angela Merkel, CSU leader Edmund Stoiber and SPD leader Franz Müntefering, according to the report.

Before the election, Schröder had reportedly said that it would be either "victory or Viktoria" for him, meaning that he would either stay on as chancellor or spend more time with his adopted daughter, Viktoria.