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SPD chief Andrea Nahles said her centre-left party, Germany's oldest, had failed "to break free from the government" and carve out a clear profile of its own after serving in multiple, compromise-laden "grand coalitions".

Angela Merkel is stepping down as the leader of her political party, but will stay on as Germany's chancellor until the end of her term.

Today, Chancellor Angela Merkel signalled the end of an era - the longest-serving European head of government declared that she would step down as party leader of the Christian Democratic Union (CDU), following heavy losses for her party in a regional election on Sunday in the federal state of Hesse.

She confirmed that she would not stand again as chancellor at the next general election.

A senior CDU member told Reuters that party leaders wanted to discuss the possibility of Merkel reversing her decision to seek re-election as party chairwoman in December.

Merkel is under pressure from her Social Democrat coalition partners to deliver more policy results and the center-left party could yet pull out of the government at a mid-term review next year.

She will not run for reelection after that, she added.

"Merkel said national politics had had a regrettable negative influence on the results in Hesse, calling them 'disappointing and bitter, '" reports The Guardian.

Merkel told the party that this will be her final parliamentary term as chancellor, the dpa news agency reported, citing unidentified party sources.

"The situation for Merkel is grave", daily Sueddeutsche Zeitung judged late Sunday.

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The right-leaning spectrum of the German political scene has been far more critical. Typically, the leader of the party is also the chancellor, but it's not a hard and fast rule. Ms. Kramp-Karrenbauer, known as AKK within the CDU, led Saarland as premier for the past seven years.

Observers had widely expected that Merkel would not seek another term in office after 2021.

There is precedent for the chancellor not leading his or her party.

Merkel's predecessor, Gerhard Schroeder, stepped down as leader of his party in February 2004 but remained chancellor until November of the following year. Helmut Schmidt, West Germany's chancellor from 1974 to 1982, never led the Social Democrats.

Two prominent candidates immediately threw their hats in the ring for the CDU leadership.

The move sets in motion the process for the CDU to settle on and groom Merkel's successor.

"I hope that, once there is a clear decision, these arguments over personnel and direction... will be over", she said pointing out that if things go well "it could have a positive effect for us and our work together". "I see this as an opening, a phase of opportunities".

She swung her conservatives behind bailouts for Greece and other struggling eurozone nations, striking a balance between calls for a strict approach at home and more generosity overseas.

Merkel's sinking popularity began in 2015 when her "open door policy" on immigration permitted over 1 million migrants and refugees, predominantly from the Islamic world, to enter the country.

Interior Minister Horst Seehofer heads the Christian Social Union, the Bavaria-only sister party to Merkel's Christian Democratic Union.