GERHARD SCHRÖDER’S tenuous grip on power appeared to slip away last night as voters in Dresden abandoned the German Chancellor and threw their support behind his rival, Angela Merkel.

The final ballot of the bitterly contested general election saw Frau Merkel’s Christian Democrats secure an additional seat, seizing an unassailable lead over Herr Schröder’s Social Democrats in parliament.

The Christian Democrats have 226 seats in parliament, compared with 222 for the Social Democrats.

The result may force Herr Schröder finally to concede defeat. An announcement could come as early as today, breaking a stalemate that has paralysed Germany’s government since the general election on September 18.

Yesterday’s delayed poll in Dresden, prompted by the death of one of the candidates, had kept alive Herr Schröder’s slim hopes of remaining in power. However, last night the stage was set for a dramatic resignation by one of Europe’s longest serving leaders, handing power to Frau Merkel as the head of a grand coalition of Christian Democrats and Social Democrats.

His resignation may be announced at a meeting of party executives later today which, poignantly, is the Day of German Unity, marking the 15th anniversary of unification.

Several Social Democrats grandees have been urging their party to give up their insistence that the Chancellor leads a new coalition government with the Christian Democrats. Their calculation is that it would be better for the Social Democrats to serve, without Herr Schröder, in a grand coalition led by Frau Merkel.

They could thus push forward their own version of the reform agenda. Grand coalitions are usually short-lived and the Social Democrats would emerge in a much stronger position when new elections were held, they argue.

That was the calculation in Berlin last night and will be one of the issues to be considered if the Chancellor decides to throw in the towel.

The Dresden vote was never going to change the fundamentals of the general election result. The question rather was: would it usher in the beginning of the post-Schröder era? With considerable tactical skill, the Dresdeners did just that. Each German has two votes, one for the local constituency MP voted in on a first past the post system, while the second vote influences the balance of power between the parties in the Berlin parliament.

Yesterday Dresdeners cast their first vote for the Christian Democrat Andreas Laemmel, a local baker. He secured 37 per cent of the vote, slightly less than 5 per cent higher than his Social Democrat rival.

Using their second vote, the Dresdeners shifted their support from the Christian Democrats to the pro-business Free Democrats.

They were aware that under the complex German election system that there was a risk of the Christian Democrats winning too many votes and thus losing a parliamentary seat elsewhere in Germany.

It is a baffling system but the people of Dresden seemed to have mastered it to the benefit of Frau Merkel.

She will now enter grand coalition negotiations with greater confidence and will resist Social Democratic calls for her to make way for Herr Schröder.

One of the scenarios last week was that he would step down if Frau Merkel did likewise.

Now with an extra parliamentary seat at her command, this seems very unlikely. Increasingly, Herr Schröder is beginning to seem like an obstacle to the formation of a new government rather than an indispensable component.

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