UPDATE 1-German SPD members vote to join Merkel despite misgivings
* German centre left votes to back grand coalition
* Some 76 percent of SPD members approve despite misgivings
* New Merkel government to take office on Tuesday
BERLIN, Dec 14 (Reuters) - Germany's Social Democrats voted overwhelmingly in favour of joining a "grand coalition" with Chancellor Angela Merkel's conservatives on Saturday, clearing the way for a new right-left government that will take office on Tuesday.
Merkel's Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), won the Sept. 22 election but fell short of a majority. They needed a partner and spent much of the last three months negotiating a coalition deal with the arch rival SPD, which came a distant second.
A "no" vote could have plunged Germany into crisis and complicated European Union efforts for a banking union reform that would see the European Central bank police the sector with a new agency to shut down weak lenders.
A "no" vote would have also forced Social Democrats (SPD) leader Sigmar Gabriel and his deputies to resign. Despite losing the election, they lobbied hard to win over sceptical members after getting much of their campaign programme incorporated into the coalition agreement.
The SPD said 76 percent of its grassroots members who took part in the unprecedented postal ballot voted to join forces with the conservatives despite initial misgivings. The SPD said 256,643 voted "yes" while 80,921 voted "no". Some 32,000 ballots were invalid.
"We're not only the oldest party in Germany but we're also the most modern party - the party of mass participation," Gabriel told some 400 cheering SPD volunteers who had spent the day counting some 369,680 ballots in a cold Berlin warehouse.
"We've set new standards," added Gabriel, who managed to turn September's electoral defeat into a rallying point for the SPD with the referendum gamble. "We don't just talk about grassroots democracy. We live it. I haven't been as proud of my party in a long time."
However, the SPD, still struggling to overcome the steep drop in support from the 2005-09 "grand coalition" under Merkel, could prove to be less pliant junior partners this time around.
Thanks to what analysts called a clever strategic move to ask grassroots members to vote on the coalition, the SPD forced Merkel to accept many of the SPD's leftist policies even though the conservatives scored 41.5 percent of the vote in September compared to 25.7 for the SPD.
Conservative leaders had already approved the deal and Merkel's deputy in the CDU, Hermann Groehe, said the conservatives were "delighted" by the results of the vote.
"We're pleased that the new government can get to work," he said.
The leaders of the three parties will announce the 15 members of the cabinet on Sunday, with the SPD getting six of the posts.
SPD sources said Gabriel would be vice chancellor and economy minister. Wolfgang Schaeuble will remain finance minister but other key changes are expected.
On Saturday speculation swept Berlin that Ursula von der Leyen, an ambitious potential heir to Merkel, would become defence minister or interior minister after serving previously as labour minister and family minister.
Despite her new government having a four-fifths majority in parliament, Merkel's third four-year term could be more difficult and more domestically focused than her first two terms that were heavily shaped by the global financial crisis and turmoil in the euro zone.
The coalition agreement is due to be signed on Monday and Merkel's new government could be sworn into office on Tuesday.
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