Angela Merkel’s coalition Government was in disarray last night after Franz Müntefering, Germany’s deputy leader, stepped down suddenly from all of his political posts.

The move threw into doubt the ability of Ms Merkel’s governing alliance of Christian Democrats and Social Democrats to push through further reforms or survive until the general election scheduled for 2009.

Mr Müntefering, a 67-year-old Social Democrat with a Prussian sense of duty, said that he was leaving office to spend more time with his wife who has been suffering from cancer. Her health has reportedly worsened.

“My wife is seriously ill,” Mr Müntefering said. “She has just been through her fifth operation since 2001 and will now have a period of convalescence. I want to be with her.”

Mr Müntefering, who had been right-hand man to Gerhard Schröder, the former Chancellor, was one of the principal architects of the Grand Coalition of Germany’s two biggest parties - and his resignation is viewed as a sign of impending crisis.

In his view the coalition had a specific mission: to overhaul the welfare state in a way that would not alienate Social Democrat voters. Over the past year he had grown increasingly disillusioned with Ms Merkel. After negotiations on Monday night in which he failed to win a minimum wage for postal workers, an exhausted Mr Müntefering blurted out that he was “deeply disappointed” in the Chancellor.

But he had made his decision to leave earlier, after worrying medical results about his wife’s health.

Friends say that he had felt torn, worried that he was letting down his wife and unable to do a full job at a time of serious strain in the coalition.

Mr Müntefering will be succeeded as Labour Minister by Olaf Scholz, parliamentary whip for the Social Democrats. The bull-necked 49-year-old will now lead the internal fight against Ms Merkel on minimum wages. His appointment marks the beginning of the election campaign.

The post of deputy chancellor will be taken by the Social Democrat Foreign Minister, Frank Walter Steinmeier. That too signals that the gloves are coming off. Ms Merkel has made a name for herself as an international stateswoman since taking power. This has put the Foreign Minister in the shadow - and he is determined to score points at her expense.

Ms Merkel is facing a mutiny. The mood of the political class is swinging against her. Hailed as the heroine of Heiligendamm after the G8 summit, she is now being described as a “lost leader”. Hugo Müller-Vogg, the commentator, says that she has lost her “domestic policy compass”.

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