Merkel's Christian Democratic Union (CDU) and its Bavarian sister party the Christian Social Union (CSU) finished four seats short of an absolute majority in the new Bundestag, lower house of parliament, one of the best results achieved by the conservatives.
The two parties together polled 41.7 per cent of the votes, nearly right per cent more than in the last election four years ago and secured a total of 311 seats in the lower house, according to official results published today.
Merkel is only the third post-war chancellor to win a third four-year term after her mentor Helmut Kohl (1982-1998) and Konrad Adenauer (1949-1963).
The results are seen as a strong endorsement of 59-year- old Merkel's leadership during the euro zone debt crisis and her government's policies, which contributed to economic stability at home, low unemployment level and a higher standard of living than in many of Germany's EU partners.
Merkel described the outcome of the election as an "overwhelming vote of confidence" in the policies of her government and her party.
After the victory, Merkel said she was open to negotiations with her centre-left rivals on forming a coalition government .
"We are open for discussions," Merkel said.
"I had a first contact with the SPD (Social Democrats) chairman who understandably asked that the SPD first hold its party meeting on Friday," she told reporters.
But she added she did not rule out talks on a potential coalition with the ecologist Greens.
The CDU's victory was tempered by the rout of Merkel's junior coalition partner, the liberal Free Democratic Party (FDP), which was eliminated from the Bundestag for the first time in 64 years as it failed to cross the threshold of five per cent votes needed to gain parliamentary representation.
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