The second vote had been hurriedly scheduled in the afternoon after Merz suffered a shock defeat in the initial ballot.

In the second round of voting, the conservative politician won 325 votes in the 630-member assembly, with 289 voting against.

Together, the MPs of the CDU, CSU and SPD - who are set to form a government on Tuesday - have 328 seats in the Bundestag.

In the first ballot on Tuesday morning - expected to be a formality - the conservative politician had received just 310 of the 621 votes cast, six fewer than the required majority of 316. 

The shocking results sparked hours of urgent meetings between the coalition partners, with both the Union and SPD factions accusing each other of having toppled the vote. 

READ ALSO: Merz fails to be elected German Chancellor in first parliamentary vote

It also delayed the confirmation of the coalition's 18 cabinet ministers, who cannot be sworn in until Merz is confirmed as Chancellor.

Following the vote, the CDU leader was officially sworn in as Chancellor by President Frank Walter-Steinmeier at Berlin's Bellevue Palace, along with his cabinet ministers. 

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This paves the way for the new black-red coalition to commence its government business as planned on Wednesday, with Merz heading on official visits to Paris and Warsaw respectively. 

However, the turbulence of the first failed election - a first in German history - has placed the incoming Chancellor on shaky ground, raising questions about the level of support he has even within his own party.

The unprecedented first-round loss was "a bad start" for Merz and "shows that he cannot fully rely on his two coalition parties, wrote analyst Holger Schmieding of Berenberg Bank.

"That will sow some doubts about his ability to fully pursue his agenda, damaging his domestic and international authority at least initially."

The far-right Alternative for Germany (AfD) especially cheered the heavy political blow to Merz, who has vowed to restore stability in Berlin after half a year of political turmoil.

"Merz should step aside and the way should be cleared for a general election," AfD co-leader Alice Weidel said earlier, calling the first-round result a "good day for Germany".

'Great uncertainty'

As the CDU leader prepares to enter office, he faces a number of challenges, including an ailing economy, a buoyant far right and a desperate need for new skilled labour. 

In foreign policy, Merz will also have to navigate the whims of US President Donald Trump, whose tariffs have recently crushed growth expectations for the German economy. 

Merz, who boasts a strong business background but has never held a government leadership post, said on Monday: "We live in times of profound change, of profound upheaval... and of great uncertainty.

Incoming Chancellor Friedrich Merz (CDU) stands at a doorway at Bellevue Palace in Berlin. Merz is set to be sworn in as Chancellor at the palace on Tuesday. Photo: picture alliance/dpa | Hannes P Albert

"And that is why we know that it is our historic obligation to lead this coalition to success," he said.

Over the coming days, one of the first orders of business will be a crackdown on immigration, including a severe tightening of controls on Germany's borders and a deportation offensive.

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According to incoming Interior Minister Alexander Dobrindt (CSU), key decisions on migration policy will be taken by Merz immediately, with a tougher stance at the borders "from day one". 

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Earlier on Tuesday, CDU parliamentary leader Jens Spahn had emphasised the urgency of a new government taking office, given the economic and geopolitical turbulence.

"The whole of Europe, perhaps even the whole world, is watching this second round of voting," Spahn said before the second vote, urging MPs to "be aware of this special responsibility".

With reporting by DPA and AFP