Leaders from Germany's centre-left Social Democrats (SPD) and two smaller parties will recommend to their parties moving into formal coalition talks and have agreed a roadmap for negotiations, SPD chancellor candidate Olaf Scholz said on Friday.
The Social Democrats, who came first in last month's election, the Greens and the business-friendly Free Democrats (FDP) said exploratory talks on whether they had enough in common to form a government together had been constructive.
"A new start is possible with the three parties coming together," Scholz told a news conference.
FDP leader Christian Lindner said the "traffic light" coalition - named after the party colors of the SPD, the FDP and the Greens - was an "opportunity".
"If such different parties could agree on joint challenges and solutions, then that would be an opportunity to unite our country," he said, "a chance that a possible coalition could be greater than the sum of its parts."
This would be the first time such a "traffic light" coalition governed at a federal level and would put an end to 16 years of rule by the conservatives under Chancellor Angela Merkel.
"We are now convinced there has not been an opportunity like this to modernize society, the economy and the government for a very long time," Lindner told the news conference.
All three parties are expected to deliver a decision by Monday on whether or not to go forward with the talks, Scholz said.