Scholz is widely expected to become finance minister and vice chancellor in the new government if the coalition agreement is approved.
As Germany's Social Democrat Party of Germany (SPD) heads into an unexpected period of transition after its former head Martin Schulz shocked many by stepping down at the weekend, the leadership of the party now appears to be in the hands of Andrea Nahles.
Andrea Nahles, a plain-speaking 47-year-old former labor minister with a left-wing slant and strong oratory skills, will become Schulz's successor.
The new governance agreement, however, is yet to be voted on by party members.
Two sources in the SPD leadership said the party decided not to make Nahles a caretaker leader because it did not want to pre-empt a vote at the party congress and so possibly influence the members' vote on a coalition with Merkel. He told German news agency, "Die Welt", that "there no statutory basis exists in the SPD's rules that allows for the appointment of a new party leader. No more indiscipline in the SPD", said Ralf Stegner, the regional SPD leader in Schleswig-Holstein.
German media report that SPD members in the state of North Rhine-Westphalia were especially opposed to Mr Schulz - formerly European Parliament president - becoming foreign minister.
In a cartoon published on Tuesday, the Sueddeutsche Zeitung daily showed Nahles with a whip riding an SPD snail.
But Oettinger also conceded that this would be her final term as chancellor, if the new "grand coalition" goes ahead, addressing a succession debate that is starting to take hold as the CDU starts to look ahead to a post-Merkel era.
Germany has been without a formal government since the September 24 election and investors are anxious about a delay in policymaking, both at home and in the EU. Mr Schulz secured six ministries in a new government for the SPD, including finance, foreign and labour, giving the Social Democrats a critical role in shaping Berlin's policy on Europe over the next four years. The far-right populist Alternative for Germany (AfD) entered the Bundestag for the first time. Merkel's conservative bloc was also down 1 point at 29.5 percent.
German Social Democratic Party (SPD) leader Martin Schulz Tuesday announced his resignation as the party's chairman, as the infighting inside the party continued. But he changed his mind after the Union failed to form a government with two small parties.