CDU and SPD MPs in the Bundestag (German parliament) plan to create a post for a new "permanent expert" with new powers to supervise the security services, the Süddeutsche Zeitung (SZ) reported.
The move is a reaction to scandals that have shaken Germany's intelligence community in recent months.
Earlier this year, it emerged that German spies had been passing information on German companies and European allies to the American National Security Agency (NSA) for years – and that Merkel's office did nothing to stop this and may even have actively hidden it from parliament.
And in July there was outcry after prosecutors opened a treason investigation into digital rights blog Netzpolitik.org for publishing details of secret plans to broaden surveillance of internet users,with the scandal ultimately seeing Germany's chief prosecutor dismissed.
'Intelligence commissioner light'
The "permanent expert" - seen as an "intelligence commissioner light" by coalition MPs, as opposed to the full commissioners who oversee policy areas such as the military – will not be able to discuss their role in public.
The expert's job will be to inform the MPs who oversee the intelligence services, including the intelligence oversight committee, the confidentiality committee and the G-10 committee.
Until now, the committees have only been supported by a secretariat with no special powers.
MPs hope to find candidates from a broader pool than the former Supreme Court judges who have often been rushed into similar stop-gap roles in the past.
This time, the permanent expert will be expected to serve at least the length of one parliamentary term (four years) and be drawn from the ranks of younger high-ranking judges or experienced state prosecutors.
New law to pass by year's end
If all goes to plan, both parties in the coalition will approve the law soon after the Bundestag returns from its summer break, before a full vote in the chamber by the end of 2015.
Lawmakers have long argued that existing parliamentary oversight of the security services is inadequate.
This year has finally offered an opportunity to find a mutually acceptable plan to improve the system, lawmakers told the SZ.
"There is a great chance that we will reach a consensus," CDU MP and intelligence policy expert Clemens Binninger told the newspaper.