By Ray Furlong BBC correspondent in Berlin

Muentefering (left) is popular with party rank-and-file

More than 95% of the delegates at a special conference in Berlin endorsed Mr Muentefering, a close Schroeder aide

Mr Schroeder has insisted his government will not change course despite handing over the leadership.

But the move, which does not affect his position as chancellor, comes amid criticism of his welfare reforms.

And as he spoke at the conference, a Greenpeace activist abseiled down from the ceiling of the conference hall with a banner protesting at government policies.

It was just one small sign of the huge wave of discontent with Mr Schroeder's government which has surged across Germany and into his own party.

Party anger

Mr Schroeder is stepping down as leader due to anger within the party over welfare cuts, a freeze on pensions and the introduction of fees to visit the doctor, although he will remain chancellor.

As he stressed the reforms were necessary in his speech, applause was lukewarm.

But he did get a standing ovation at the end of his speech, perhaps in recognition of his two election victories for the party.