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BERLIN - Germany's second - largest political party has announced a major shake-up, selecting Foreign Minister Frank-Walter Steinmeier as its candidate to run for chancellor in 2009, while choosing a new party leader before campaigning begins.

The Social Democratic party is hoping to boost its approval ratings and take back the government from Chancellor Angela Merkel, who defeated the party's Gerhard Schroeder in an early election in 2005. Her slim margin of victory forced her to form a coalition government of her Christian Democrats and the Social Democrats.

But the unwieldy grand coalition has frayed in recent months, as both parties look toward the 2009 election and the possibility of advancing their agendas without compromise.

Steinmeier said Sunday outside a party meeting near Potsdam that Kurt Beck has resigned as party leader and would be replaced by former vice-chancellor Franz Muentefering.

Beck said he asked Steinmeier two weeks ago to run against Merkel for the top office.

"I assumed this office to help my party," Beck said in a statement.

"Because that no longer seems possible, I've drawn the consequences."

For more than two years under Beck, the party has lost members and political clout as the junior partner in the coalition. The Social Democrats now have fewer members than Merkel's Christian Democrats for the first time since in 1945.

The Social Democrats' losses have coincided with increased support for the once-shunned Left party, made up of Social Democrat defectors and former East German Communists. Beck's popularity began to plummet amid speculation he would consider a partnership with the Left party. Steinmeier, on the other hand, has ruled out any federal-level partnership with the Left.

Steinmeier said Sunday's leadership change marked "a hard day for the party."

His candidacy for the 2009 race, however, could give the party a shot at regaining the chancellory.

The popular 52-year-old became known to the public as former chancellor Schroeder's chief of staff. He has served in Merkel's cabinet as foreign minister and recently also as vice-chancellor. His approval ratings are second only to Merkel's.

But he is untested at the ballot box - he does not represent an electoral district and was appointed rather than elected to his federal post. To become chancellor, Steinmeier would have to lead his party to victory in the 2009 parliamentary elections.

Steinmeier said he would act as interim party leader until Muentefering's appointment could be ratified by a party vote.

Muentefering served as vice-chancellor and labour minister in Merkel's cabinet until leaving politics in November to care fore his ailing wife, who died of cancer in July.