Mr Steinbrueck was premier of Germany's most populous state

Sources in the SPD also indicated party leader Franz Muentefering would become vice-chancellor, and Frank-Walter Steinmeier foreign minister.

The SPD has taken eight of 14 ministry posts after allowing conservative CDU leader Angela Merkel the chancellery.

Talks are ongoing to determine the shape of the new coalition government.

Outgoing chancellor Gerhard Schroeder of the SPD has however made clear he will play no role in the new government.

Key SPD posts

After weeks of wrangling, the SPD agreed on Monday that Mrs Merkel could be chancellor, but in return demanded half the seats in the cabinet, including eight of the 14 federal ministries.

The two rival party leaders will occupy the chancellery Profile: New foreign minister Tough finance job ahead

Mr Steinbrueck is seen as a pragmatic politician on the right of the SPD, who had the difficult job managing the finances of Germany's ailing Ruhr industrial heartland.

SPD sources said Mr Muentefering, who took over the leadership of the SPD from Mr Schroeder in 2003, would also be labour minister.

Mr Steinmeier, who has served as minister in the chancellery under Schroeder since 1999, is the man tipped to take over from Green Foreign Minister Joschka Fischer.

The other ministry posts going to the SPD are those in justice, health, environment, transport and development aid.

Other new cabinet appointees were named as Leipzig Mayor Wolfgang Tiefensee, who become transport minister, and former Lower Saxony Prime Minister Sigmar Gabriel, who takes the environment portfolio.

Health Minister Ulla Schmidt, Justice Minister Brigitte Zypries, and Development Aid Minister Heidemarie Wieczorek-Zeul will keep their offices, the German news agency DDP reports.

Edmund Stoiber, leader of the CDU's Bavarian ally, the Christian Social Union (CSU), is set to become economy minister.

A "grand coalition" of the Christian Democrats (CDU) and SPD has been tried only once before in Germany's post-war history - in the 1960s.

Correspondents say Mrs Merkel faces a tough job pushing through the far-reaching economic reforms she has promised.