Tensions are also reported between him and Sigmar Gabriel, an SPD colleague who is now foreign minister.
The embattled leader of the SPD suddenly gave up plans to become the next foreign minister on Friday, hoping to shore up support among SPD members for a new coalition with Mrs. Merkel's Christian Democrats.
Andrea Nahles also said she would fight for the ruling coalition with the conservatives of Angela Merkel.
The head of Germany's Social Democrats (SPD), Martin Schulz, has resigned to ease preparations for a coalition government with Chancellor Angela Merkel's conservatives.
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.
Before the elections, Schulz said the SPD would not form another grand coalition with the Union.
He said he hoped the party could "regain its former strength" under Nahles' leadership and as part of the German government - if members agreed to that in the upcoming ballot.More news: It is the master Ronaldo against pretender Neymar
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Handing over the leadership of the SPD may not be as simple as many in the party would like as resistance to Nahles is growing. "But I think the whole situation is not only bad for the SPD, it's a bad situation for all parties because people lose more and more trust in political parties".
Nahles said that she would start campaigning at the weekend for members to approve the coalition agreement with Merkel.
Mr Schulz, formerly European Parliament President, has said he will not serve as foreign minister.
In a cartoon 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. Media have speculated that one option might be Katarina Barley, a former SPD general secretary and family minister, or SPD veteran Thomas Oppermann. The far-right populist Alternative for Germany (AfD) entered the Bundestag for the first time. 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.
Schulz announced his immediate resignation from the chairman position Tuesday afternoon after the SPD has been rocked by internal strife following last year's election results, Der Spiegel reports.