Addressing the conservative CDU/CSU parliamentary faction, Merkel said she was "absolutely convinced" that the government should begin negotiations on the bailout, according to one of the participants at the extraordinary meeting.
Read more from our special coverage on "GREECE CRISIS"
Calling on the deputies to give the government a mandate for the negotiations, she said the conditions imposed on Greece in return for the massive rescue package were tough but justified, the source added.
Schaeuble, whose hard line on Greece triggered criticism in Europe but was popular in his own country, also urged MPs at the meeting to support the agreement, participants said.
Germany is one of several EU countries whose national parliaments must sign off of any debt deal for Greece.
The measure is expected to pass with a clear majority in the Bundestag lower of house of parliament today, even if Merkel is facing growing disaffection within her CDU/CSU parties over lending more money to crisis-hit Greece.
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