UPDATE 2-Merkel's CDU votes on German coalition deal after new cabinet picks

* Five months after vote, Merkel edges towards fourth term

* Coalition deal agreed between conservative, SPD leaders

* Merkel vows no new taxes, debt under next government

* SPD members still voting on coalition deal, result unclear

* Merkel's choices for new cabinet include younger faces (Adds details from Merkel's speech)

BERLIN, Feb 26 (Reuters) - German Chancellor Angela Merkel urged her Christian Democrats (CDU) on Monday to approve a coalition deal with the Social Democrats (SPD), a step that would bring her closer to a fourth term.

The more formidable hurdle to ending a five-month political impasse in Europe's largest economy comes next week, however. On March 4, results of a binding postal vote by members of the centre-left SPD will be announced and they are far less certain.

The CDU party congress follows Merkel's announcement of her picks for a new, younger cabinet intended to revive the party, which has been riven by disagreements over how to respond to the Alternative for Germany (AfD) since losing votes to the far right party in national elections in September.

The CDU's youth wing has called for the party to renew itself in the wake of its worst election result since 1949 in September and Merkel, 63, stressed in her speech to delegates at Monday's CDU meeting that younger faces were in the new team.

She asked her party to vote in favour of the deal, which is expected to go through easily, as a poll showed support for both her conservative bloc - which also includes the Bavarian Christian Social Union (CSU) - and the SPD rising.

"We want to make our contribution to forming a stable federal government that is capable of acting," Merkel said, adding that most people in Germany and beyond expected this.

"The fact we're voting on a coalition treaty today five months after the election shows that we're dealing with a difficult situation that we've never faced before."

She reassured delegates that the new German government would not take out any new debt, avoid tax increases, seek to renew the European Union, ensure fast internet is available everywhere in Germany by 2025, boost research spending, create 8,000 nursing jobs and take a "zero tolerance" policy on security.

Merkel said conservatives secured wins in coalition talks with the SPD, including preventing what she called the "aberration" of a single health system that the SPD had demanded to replace the current dual public-private system.


Merkel disappointed many conservatives by agreeing to give the SPD the powerful finance ministry in a new government. She said it was a "painful" loss but added that it was right not to let negotiations fail due to portfolios rather than substance.

She also underscored the importance of the economy ministry - which the CDU will retake after years in SPD hands.

The conference will also vote on the appointment as CDU general secretary of her close ally Annegret Kramp-Karrenbauer, widely seen as her preferred successor. Dubbed "mini-Merkel" by some media, the Saarland state premier, 55, shares some but not all of Merkel's views.

Her Catholic, western German background contrasts with Merkel's Protestant, eastern roots. While socially conservative and known for opposing gay marriage, Kramp-Karrenbauer is a strong supporter of the minimum wage and workers' rights.

After 12 years as chancellor and almost 18 years in charge of her party, Merkel's authority is waning and on Sunday, she responded to growing calls for new blood at the top of the CDU..

Merkel's efforts to forge a coalition with two other smaller parties collapsed in November. That forced her to woo the SPD, which had been a coalition partner in her 2013-2017 government but was reluctant to repeat the experience after seeing its own support fall to its lowest since World War Two.

If SPD members vote "no" in their ballot, the most likely outcome is a new election or possibly a minority government.

Experts say a snap election could result in further gains for the anti-immigration AfD, which entered parliament for the first time in September.

Some analysts say the prospect of a new election will spur SPD members into voting "yes", to prevent a further deterioration in support for the Social Democrats.

A Forsa poll on Monday showed the SPD up two points from a week ago, at 18 percent, while Merkel's conservatives edged up one point to 35 percent. The AfD remained the third-strongest party with 13 percent.

Forsa researcher Manfred Guellner said the grumbling in both camps had waned since Merkel proposed Kramp-Karrenbauer for CDU general secretary and former SPD leader Martin Schulz decided against joining a Merkel-led cabinet as foreign minister. (Additonal reporting by Michael Nienaber and Andreas Rinke; editing by Mark Heinrich)