In an interview with ZDF, Germany's public broadcaster, Mrs Merkel refuted suggestions that she would soon give up party chairmanship, holding firm against critics in her own party who have said that she has sold out in order to remain in power.
If the Social Democrats' members do not vote to back the coalition deal and Germany is forced to hold a new election, Merkel said she does not rule out again seeking another term as chancellor.
Christian von Stetten of Merkel's Christian Democrats (CDU) said lawmakers in parliament - not coalition negotiators - had the ultimate say on policies, and had gained power since elections a year ago because the coalition parties now hold only a slender majority.
"Now we need to show that we can start with a new team", she added.
The SPD and CDU both had their worst results for decades in the election, which catapulted the far-right Alternative for Germany (AfD) into parliament for the first time, with 94 seats.More news: Kim Jong Un invited South Korean president to North Korea, Seoul says
In November, her efforts to form a government with two smaller parties failed, leaving the country in political deadlock and prompting some members of her CDU party to demand a succession plan.
"I understand the disappointment", she said, but stressed that she "naturally" planned to stick with her pledge to stay on for four years as chancellor and party chief rather than make way for a successor before the end of the term.
Merkel is anxious to get a government in place and end more than four months of political limbo in Europe's largest economy.
Even that may prove optimistic if SPD leader Martin Schulz fails to persuade his party's 464,000 members to ratify the deal in a postal ballot, whose result will be announced on March 4.
A survey of 5,127 voters conducted by pollster Civey on Wednesday for t-online indicated that nearly 60% of SPD supporters want the party's members to back the coalition deal.More news: Burning Stock on the move: Ciena Corporation (NYSE:CIEN)
She rejected a suggestion that generous concessions to the SPD had weakened her position in the CDU, saying she had chose to cut a deal for the sake of Germany.
Handing over the finance ministry - long the domain of Merkel lieutenant and fiscal hawk Wolfgang Schaeuble - "was one concession too many", fumed lawmaker Wolfgang Bosbach, reflecting a widely held view in the conservative party. "I belong to those people who keep their promises".
The governor of Schleswig-Holstein state, Daniel Guenther, said earlier in daily Die Welt that "we need new faces" in the Cabinet.
He said the SPD were also for sound finances and would preserve Schaeuble's balanced budget policy.More news: Donald Trump, Kim Jong-un impersonators ejected from Opening Ceremony
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