Germany's Greens and the liberal FDP party said Wednesday they wanted to try to form a coalition government with the centre-left Social Democrats (SPD), dealing a blow to Chancellor Angela Merkel's conservatives.
The move brings the Social Democrats' Olaf Scholz a step closer to the chancellery after 16 years of Merkel's centre-right-led government.
The political upheaval in Europe's biggest economy was unleashed by last month's general election which Scholz's party won with 25.7 percent, followed by Merkel's CDU-CSU bloc at 24.1 percent.
For either party to head the next German government it would need the support of the centre-left Greens and the pro-business Free Democrats (FDP), which came third and fourth.
Despite leading the conservatives to their worst-ever election result, beleaguered CDU leader Armin Laschet insisted he still has a shot at the top job.
Speaking to reporters, Laschet said the conservatives "respect the decision" by the two kingmaker parties to pursue a coalition with the SPD.
But the CDU-CSU is "still ready to hold talks," he said.
CSU leader Markus Soeder however gave a more sobering assessment, saying the possibility of a CDU-CSU government had essentially been "rejected".
The conservative bloc must now prepare itself for a stint in opposition after four Merkel-led coalitions, he said.
"This will change our country," Soeder said, adding: "The conservatives will enter a new era too."
Recent surveys suggest most Germans want Scholz, who is also finance minister and vice chancellor, to become the next leader of Europe's top economy.
- 'Building bridges' -
Green co-leader Annalena Baerbock said that after preliminary discussions with the SPD and CDU-CSU, the Greens "believe it makes sense" to focus on a tie-up led by the Social Democrats.
Baerbock said Germany faced "great challenges" and needed "a new beginning".
"This country can't afford a lengthy stalemate," she said.
The FDP said it had accepted the Greens' proposal to move on to formal exploratory coalition talks with the SPD.
The first such three-way talks will start on Thursday, FDP leader Christian Lindner said.
The Greens and the FDP are not natural bedfellows, diverging on key issues including taxation, climate protection and public spending.
But both parties have said they also have common ground and want to "build bridges" in order to govern.
All sides are eager to avoid a repeat of the 2017 election aftermath, when the FDP dramatically walked out of coalition talks with the conservatives and the Greens and it took months for a new government to take shape.
- 'Not a done deal' -
A tie-up of the SPD, Greens and FDP, which would be a first in Germany, has been dubbed a "traffic light" constellation after the parties' red, green and yellow colours.
Green co-leader Robert Habeck said that while the party shared some common ground with the conservatives, there are "significant differences" too.
Informal talks over the last few days revealed "more overlap" with the Social Democrats, he said, on issues like climate protection, social justice and European integration.
The clear preference for a Scholz-led government is likely to put further pressure on Laschet, whose political future hangs in the balance.
Gaffe-prone Laschet, once seen as a shoo-in for the chancellery, fell out of favour with voters after he was caught laughing during a tribute to victims of Germany's deadly floods in July.
The FDP however threw Laschet a lifeline by stressing that the conservatives were not out of the running yet.
The FDP's Lindner said a coalition with the CDU-CSU and the Greens -- dubbed a "Jamaica" alliance because the parties' colours match that country's flag -- "remains a viable option for us".
The FDP has served as the junior partner in a conservative-led government before, and they share a dislike for tax hikes, red tape and a relaxation of Germany's strict debt rules.
Green co-leader Habeck also cautioned that "nothing is a done deal yet".
Merkel herself is bowing out of politics, although she will stay on in a caretaker capacity throughout the coalition haggling.