Angela Merkel was elected Tuesday as Germany's [Images] first female chancellor, taking power at the helm of an unwieldy alliance of the right and left that now officially has the job of turning around Europe's biggest economy.

Lawmakers voted 397 to 202 with 12 abstentions to make Merkel Germany's eighth leader since World War II, succeeding Gerhard Schroeder, whose seven-year government of Social Democrats and Greens was ousted by voters September 18.

Schroeder was the first to walk over and congratulate a smiling Merkel after the vote was announced.

The vote comes six months after Schroeder announced that he was seeking national elections a year early, plunging Germany into political uncertainty, and more than two months after an inconclusive election forced Germany's biggest parties into talks on a so-called "grand coalition" between Merkel's conservatives and the centre-left Social Democratic Party.

Merkel, head of the conservative Christian Democratic Union, has been forced into awkward compromises on taxes and welfare-state reforms that some fear could undermine her coalition with the Social Democrats and slow efforts to fix a lagging economy.

However, the Social Democrats' parliamentary leader said he was convinced the new government will succeed.

"For that we require a strong chancellor," Peter Struck, defence minister under Schroeder, told The Associated Press. "The foundation stone will be set with the election of Merkel."