Conceding his defeat after the first exit polls, Kohl told his supporters, "I take responsibility for the electoral defeat without giving any reasons" and said he was stepping down as chairman of his party, the Christian Democratic Union (CDU), which he had led for 25 years.

According to exit polls, Schroeder's Social Democratic Party (SPD) won 41 per cent of the vote compared to between 35 and 36 per cent for Kohl's conservative CDU.

The cigar-smoking Schroeder, who created history by being the first person to defeat an incumbent chancellor, vowed to fight against unemployment and implement the planned "alliance for jobs" through the cooperation of government, management and unions.

However, it was not clear whether Schroeder would win enough seats in the Bundestag (Lower House of parliament) to rule in coalitionwith the Left wing, Ecologist Greens party.

If he fails he could form a grand coalition with the CDU, although Kohl has already ruled out serving in such a government.

The grand coalition, often dubbed an "elephants' wedding" could be led by Schroeder with an important post for Kohl's Deputy Wolfgang Schaeuble.The exit polls gave the Greens 6.5 per cent while the Liberal Free Democrats (FDP), Kohl's junior coalition partner, also won 6.5 pc. The CDU's general secretary Peter Hintze addressing a news conference at the party headquarters here conceded defeat saying his party would respect the outcome of the elections.

Analysts said the Social Democrat-Greens combine would be able to notch a majority of 656 seats at stake giving no chance to the PDS to take a shot in being part of the new coalition government. Kohl, 64, who was hailed as the Unity Chancellor after the unification of the two Germanys in 1990 and the driving force behind the "Euro" to be launched in January next, apparently got a drubbing inEast Germany on the issue of unemployment.

The former communist ruled state had rallied behind Kohl strongly in the 1990 and 1994 elections.