BERLIN, Sept. 26 (Xinhuanet) -- German Chancellor Gerhard Schroeder's challenger Angela Merkel said Monday that she would not discuss a coalition unless Schroeder gives up the chancellorship in a new government.

    "The precondition on trust is that we, as the biggest party, put up the chancellor," she told reporters after a meeting of her alliance, the Christian Democratic Union and the Christian Social Union (CDU/CSU).

    Merkel also set other conditions for further formal talks with Schroeder's Social Democratic Party (SPD) on a possible grand coalition government.

    She said both parties must agree on the general state of the nation and its problems. There also had to be agreement on the key problem areas, including further cuts to unemployment benefits, to be tackled.

    Merkel and Schroeder had a meeting last week and are expected to meet again on Wednesday.

    On Sunday, Schroeder said that his party and the opposition CDU/CSU should set up a coalition first and then discuss the chancellorship.

    "In politics, you sit down and work out a platform for a coalition first. Later you work out the personnel questions," Schroeder told the German TV ARD.

    He said that he would do everything to ensure that a grand coalition could be formed between his Social Democratic Party (SPD)and the CDU/CSU, softening his claim to the chancellorship.

    Neither the SPD nor the CDU/CSU won the majority needed to forma new government in Sunday's general election. However, both Schroeder and Merkel claim the chancellorship and a mandate to form the new government.

    Schroeder has suggested that he would withdraw his claim to the chancellorship if Merkel also does so, or they could share the chancellorship on a rotating basis.

    The CDU/CSU, with a 35.2 percent of votes, has sought to form a coalition government with the Green Party, which is currently the junior partner of the SPD. But the Greens rejected the proposal.

    The Free Democratic Party (FDP), the coalition partner of the CDU/CSU, refused to cooperate with the SPD, which received 34.3 percent of votes.

    The only remaining option is a grand coalition of the SPD and the CDU/CSU as they both rejected cooperation with the Left Party.

    The German tabloid newspaper, Bild, which has the biggest circulation in Germany, reported on Sunday that Schroeder is ready to make concessions in talks with the CDU/CSU.

    The newspaper quoted SPD sources as saying that Schroeder will agree to form a coalition first. The two may share the chancellory power on rotation. Enditem