His coalition partners in the centre-left SPD said the vote would go ahead and Jens Spahn, the parliamentary leader of Merz's CDU, confirmed to reporters: "We will be able to proceed with a second round today at 3:15 pm."
The shock defeat for Merz earlier on Tuesday -- a first in post-war Germany -- set off hours of discussions among political parties over when and how to vote again.
The constitution says the second round can take place within 14 days, but Spahn said that all parliamentary parties except the far-right Alternative for Germany (AfD) had agreed to hold it on Tuesday.
He emphasised the urgency of seeing a new government take office, given the economic and geopolitical turbulence Germany faces.
"The whole of Europe, perhaps even the whole world, is watching this second round of the vote," he said, urging MPs to "be aware of this special responsibility".
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In a secret ballot on Tuesday morning, the conservative politician had received just 310 of the 621 votes cast - six fewer than the required majority of 316.
The CDU/CSU and SPD coalition parties together have 328 seats in parliament.
A total of 307 politicians voted against Merz, three lawmakers abstained, one ballot was invalid ballot, and nine MPs were absent.
This is a first in Germany: never before has a designated chancellor failed to be elected by the Bundestag following a federal election and successful coalition negotiations.
'Weak foundation'
The failed vote - which was originally seen as a formality - has cast a shadow over the incoming Chancellor and his black-red coalition, placing doubts about the level of support Merz has within his own ranks.
The left wing of the SPD has already been alienated by a hard-line immigration crackdown set out in the parties' coalition pact, as well as plans to scrap the Bürgergeld unemployment benefit - two policies that prompted the parties' Jusos youth wing to recommend voting against the agreement.
On Monday, Saskia Esken, the left-wing co-leader of the SPD, was also overlooked for a ministerial post.
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However, it was on the far right of the political spectrum that the jubilation was most pronounced.
"This shows what a weak foundation the small coalition of the CDU/CSU and the SPD, which was voted out by the people, is built on," Alice Weidel, the leader of the AfD party, wrote on X.
In a video on the platform, AfD parliamentary secretary Bernd Baumann also welcomed the news, and repeated unfounded accusations of election fraud.
"That's a good thing for a start, because this level of electoral fraud, becoming chancellor like this and then simply letting it go through, that can't be allowed to happen," Baumann said.
On Friday, the AfD was categorised as "right-wing extremist" by the German domestic intelligence agency and deemed to be working against the principles of the German constitution.
What does the Basic Law say?
Under Germany's constitutional rules, Merz can run again for election at any time over the next 14 days.
Other candidates can also throw their hat in the ring and stand for election as chancellor during the two-week period, though they would also have to meet the 316-vote threshold in the Bundestag.
If nobody is able to hit this bar, the requirement would be lowered from an absolute majority to a simple majority.
According to Germany's Basic Law, "if an election is not won within this period, a new ballot is held immediately in which the person who receives the most votes is elected."
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