Chancellor Angela Merkel has won a stunning, near-historic victory in Germany's elections, but now faces the delicate work of forming a coalition government, in which she will be without her party's traditional parliamentary allies.

Merkel's Christian Democrat-led conservative bloc scored 41.5 per cent of the vote to 25.7 per cent for the Social Democrats, her main rivals. Under Germany's mixed-member proportional electoral system, that left her five seats short of the first single-party absolute majority in the Bundestag in 50 years.

Germany Election

Peer Steinbrueck's centre-left Social Democratic party looks likely to become Merkel's next political partner, but could demand a high price to join a coalition government. (Frank Augstein/Associated Press)

Merkel and top party officials were meeting Monday to talk strategy about reaching out to the centre-left rivals they will need to form a government.

The Christian Democrats' traditional coalition partners, the Free Liberals or FDP, tumbled in the polls and failed to earn at least five per cent of the vote, the minimum needed to get seats in the lower house.

The environmentalist Greens captured 8.4 per cent of the vote, but one of their leading legislators said she could not imagine entering a coalition with Merkel's party.

The only other party that will be represented in the Bundestag, the Left Party, took 8.6 per cent of the ballot, but would be an unlikely coalition partner because of its perceived hard-line politics and partial roots in East Germany's former Communist Party.

So Merkel looks likely to end up leading a "grand coalition" government with the centre-left Social Democrats of defeated challenger Peer Steinbrueck — reviving the alliance that ran Germany in her first term from 2005 to 2009.

"We have two possibilities: the Social Democrats or the Greens," Volker Kauder, the leader of her party's parliamentary group, told ARD public Television. "We will determine in our committees how the talks should go."

"We will provide our country with a strong government," Kauder added before heading into the talks. "We don't know what the chancellor will do at this point. She has the mandate to build a new government."

Merkel greets supporter

Angela Merkel greets a supporter at her party's headquarters in Berlin after Sunday's national elections, which will almost certainly see her launch a third term as German chancellor. (Markus Schreiber/Associated Press)

Although the three parties on the left together hold a thin parliamentary majority, there's virtually no chance of their allying together.

Several weeks of negotiations are expected before a new government is formed.

After coming off worse following their previous coalition with the Christian Democrats, the Social Democrats will be loath to do a deal with Merkel this time unless she pays a high price in terms of cabinet posts and policies.

During the campaign, the centre-left party argued for a national minimum wage and higher taxes on the wealthy — both opposed by the chancellor. The Social Democrats may also demand the Finance Ministry, pushing out respected 71-year-old incumbent Wolfgang Schaeuble.

With the Free Liberals out of the legislature, several cabinet posts will open up, including for the Foreign Ministry and the Economy Ministry.

Polls suggest the consensus-driven German public would welcome a right-left partnership, as would Berlin's European partners, who hope the Social Democrats might soften Merkel's austerity-focused approach to struggling eurozone members.

With files from The Associated Press and Reuters