German Chancellor Angela Merkel won a second term in Sunday's federal election and will be able to form a government with the pro-business Free Democratic Party (FDP), dumping the center-left Social Democratic Party (SPD) with which she ruled since 2005 in an uneasy coalition, projections showed.

She will have a comfortable center-right majority in the Bundestag lower house of parliament with an estimated 323 seats, 15 more than the absolute majority of 308 seats, according to a projection broadcast on ZDF television.

According to the ZDF projection, Merkel's conservatives won 33.8 percent, down 1.4 points from the 2005 result of 35.2 percent, while SPD support fell to a record low of 23.1 percent, down 11.1 points from four years ago.

"I am happy that we have achieved a great thing, to get a stable majority in the new government made up of conservatives and the FDP," a beaming Merkel told supporters at the headquarters of her Christian Democrat Union party in Berlin.

'Angie, Angie'

"I want to be the chancellor of all Germans to enable our country to do better and come out of this crisis," she said, smiling coyly as supporters chanted "Angie, Angie!"

But the true winner of the election was the FDP, which had campaigned on a platform of tax cuts and which saw its support jump by 4.9 points to 14.7 percent, its best result in a federal election, according to projections.

After four years ruled by a so-called grand coalition between the two major parties in which many differences were shelved and political debate between the left and right was stifled, Germany politics is set to become more polarized.

The FDP is expected to fight for business-friendly measures such as relaxing rules protecting workers from dismissal, a policy that is preprogrammed to spark fierce opposition from trade unions and the SPD, the Left Party and the Greens.

Merkel's new center-right government is also expected to extend the life of some of Germany's nuclear power stations that are due to be phased out by 2020, and to lower taxes.

The two parties last governed together under Helmut Kohl as chancellor, from 1982 until 1998."We're pleased about this excellent result but we know that above all this means we must take responsibility in government, and we're ready to do that," FDP leader Westerwelle told jubilant supporters in Berlin.

In previous center-right governments, the FDP has traditionally had the foreign, economy and justice ministries.

The voter turnout at 71.2 percent was sharply after the main parties waged a lackluster election campaign.

Black Day for Social Democrats

The outcome is a disaster for the SPD, which slumped to its worst result since World War II. Merkel's SPD challenger, Frank-Walter Steinmeier, could be succeeded as foreign minister by Westerwelle.

The SPD has been in government since 1998 but was weakened by unpopular welfare cuts it enacted in 2003 and 2004 under former Chancellor Gerhard Schröder. Many traditional SPD voters drifted to the Left Party, which was formed in 2007, or they didn't bother to vote at all because they were put off by the SPD's failure to maintain a strong left-wing identity as junior partner to Merkel's conservatives.