BERLIN - Angela Merkel on Monday announced she will quit as German chancellor when her mandate ends in 2021, as she sought to draw a line under a series of political crises that have rocked her fragile coalition.

Often hailed as the world's most powerful woman and Europe's de facto leader, Merkel said she hoped her planned departure would end bitter fighting in her coalition and allow it to focus on governing. "Today, it is time to begin a new chapter," she told reporters at her party headquarters.

Referring to the quibbling strangling her coalition, Merkel noted that "the picture that the government is sending out is unacceptable".

Electoral drubbings like the latest on Sunday in the state of Hessen were "a watershed, but in them could lie a chance" for Germany's mainstream political parties including her own to find a way forward, she said.

The 64-year-old will stagger her political exit by first giving up the leadership job of her Christian Democratic Union after 18 years, when the role comes up for reelection during a party congress in December.

Merkel, who has led Germany for 13 years, added that she would neither stand in the country's next elections nor seek to renew her mandate as chancellor when her fourth term ends in 2021.

At least four candidates declared their interest to seek Merkel's job after she made her stunning announcement. But she said she would not name a successor. "I will accept any democratic decision taken by my party," she said.

Immigration stumbling block

Merkel has long held the support of Germans as a guarantor of stability and prosperity, having steered Germany through financial crises and keeping Europe's biggest economy humming with unemployment striking post-reunification record lows month after month.

But her power has been on the wane since her 2015 decision to keep Germany's borders open at the height of Europe's migrant crisis, ultimately allowing in more than one million asylum seekers. The mass arrivals left Germany deeply polarised and fuelled the rise of the far-right, essentially redrawing the country's political landscape.

Railing against the newcomers, the anti-immigrant AfD is now the biggest opposition party in the Bundestag, and after a strong showing in Hesse now has seats in all German state parliaments.

Anxious at stemming the haemorrhage of voters to the AfD, Merkel's conservative Bavarian allies CSU had championed hardline immigration and openly attacked her, all of which backfired as they ended up alienating moderate voters.

The CSU's strategy also sat uncomfortably with the third party in Merkel's uneasy coalition, the Social Democrats, sending the government lurching from crisis to crisis.

AfD leader Joerg Meuthen hailed Merkel's planned departure as "good news", as the party took credit for the earthquake in German politics.

'True to herself'

Sueddeutsche Zeitung praised Merkel for her decision, saying the leader who has always been "sober, to the point of being cold" with the political careers of others, has "stayed true to herself". Several key players in the CDU are now waiting in the wings to succeed Merkel, including party general secretary Annegret Kramp-Karrenbauer and ambitious health minister Jens Spahn, a frequent Merkel critic.

But the woman dubbed the "eternal chancellor" may not get to choose her own timetable for her long goodbye, as her departure could be hastened if the SPD brings down the government before 2021.

Following yesterday's hammering at the polls in Hesse state, the second consecutive drubbing after a regional vote in Bavaria two weeks ago, SPD chief Andrea Nahles had warned that her party may pull the plug.

But she voiced respect on Monday for Merkel's decision, saying the veteran leader has done "an extraordinary service" to the CDU.

The question now is whether by offering herself up as the lightning rod, Merkel has deflected enough of the unhappiness levelled at the coalition that has sent voters drifting away to other parties.

What is clear is that Merkel's first step towards the exit would send ripples across the European Union, where she has served a unwavering and unflappable bulwark against multiple global crises, Brexit and an unpredictable ally in the White House. Despite her global standing, Merkel said she has no plans to seek a post in the European Commission after bowing out of German politics, quashing speculation to that effect in Brussels.