Lindner, 32, resigned two years after taking the job as party members squabbled over an internal ballot coordinated by lawmaker Frank Schaeffler that seeks to build support among fellow bailout skeptics to reject the permanent rescue fund, the European Stability Mechanism.

Of the 21,500 votes required to trigger a change of party policy against bailouts, 19,000 were in place as of three days ago, Schaeffler's office said today. The official result of the ballot is due tomorrow.

Merkel's government would risk collapse if the referendum showed majority support among the junior coalition party for rejecting the rescue fund, said Peter Matuschek, an analyst at Forsa polling group. Even without such a scenario, “it will become tense over the next few weeks,” he said by phone.

Peter Altmaier, the chief whip for Merkel's Christian Democrats, rejected any suggestion that Lindner's resignation weakens the coalition and undermines Philipp Roesler, the economy minister and vice chancellor, who took over the helm as Free Democratic leader in April amid slumping support. Polls show voter backing for the FDP has failed to recover.

'Broad Majority'

Coalition policy on the rescue fund will remain unchanged, Altmaier said in an interview today with broadcaster N24. The government already “has the backing of a majority in parliament and will continue to do so,” he said. “I'm convinced that we will have a broad majority” for measures to shore up the euro.

The political diversions came as Bundesbank President Jens Weidmann, Merkel's former economic adviser, hinted the central bank may not provide its share of loans to the International Monetary Fund that was part of last week's summit agreement.

“The Bundesbank has stated its readiness to provide up to 45 billion euros as long as there is a fair distribution of the burden amongst the IMF members,” Weidmann said in comments released yesterday. “If these conditions are not fulfilled, then we can't agree to a loan to the IMF.”

Merkel's chief spokesman, Steffen Seibert, was forced to respond to questions about both Lindner and Wulff's loan from the wife of a businessman friend at a regular government press conference in Berlin, eclipsing queries on the coalition's approach to combating the debt crisis.

“The chancellor sees no reason to doubt the statements the president has made in this matter,” Seibert said. Merkel “trusts him, his person and his conduct in office.”

Merkel, in a phone call to the president yesterday, criticized his handling of questions surrounding the home loan and urged him to speak out publicly, Bild reported today, without saying how it got the information.

Merkel herself fielded a question on Lindner's resignation during a media briefing with Tajikistan's President Emomali Rahmon, and dismissed the impact on her government.

“I believe that we can work together in the government completely unaffected,” Merkel said of the coalition allies, noting Roesler's intention to quickly name a replacement. He later proposed the FDP treasurer, Patrick Doering, for the post.

Roesler stirred internal party anger by saying in a weekend interview that the members' ballot had not drawn enough participants to establish a quorum. Lindner refused to answer questions yesterday as he quit, citing only the need “to make way to enable a new dynamic.”

'Dead Duck'

The upshot for Merkel is “a dead-duck coalition partner whose actions may now become unpredictable,” Nils Diederich, a politics professor at Berlin's Free University, said by phone. “That's a risk for Merkel as she tries to navigate parliament through giving up some sovereignty in the name of fiscal union as well as increase taxpayers' input into rescuing the euro.”

Free Democratic support has plunged since the party won a record 14.6 percent in September 2009 elections, helping Merkel to a second term. All six regular polls now show FDP backing below the 5 percent threshold needed to win seats in parliament.

“The FDP leadership is imploding and we can't be certain what will emerge after today's palace coup,” said Diederich.

Bloomberg News

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