* Merkel allies crash out of another state assembly
* FDP heads for extinction in two more state votes
* CDU may have to team up with centre-left Germany-wide in 2013
By Stephen Brown
BERLIN, March 26 (Reuters) - German Chancellor Angela Merkel may have no option but to revive her old alliance with the centre-left opposition after federal elections in 2013, as her current Free Democrat coalition partners face likely further humiliation in regional polls this year.
Merkel may even end up happier in a marriage of convenience with the Social Democrats than in what once seemed to be a love match with the centre-right FDP, who were already banished to the electoral wilderness in the state of Saarland on Sunday.
With the conservative chancellor hoping to win a third term in 2013, Germany tried to draw conclusions for national politics on Monday from the vote in tiny Saarland, an untypical state on the French border which has a population of just 1 million.
Merkel's Christian Democrats (CDU) beat forecasts to secure leadership of a "Grand Coalition" in Saarland with the second-placed Social Democrats (SPD).
By contrast the FDP was ejected from the Saarland assembly as it won just 1.2 percent of the vote, far below the 5 percent threshold for winning representation at both the state and federal level. The party's decline from dream partner for the CDU - when it won a 14.6 percent in the last federal elections in 2009 - to liability now appears to be complete.
In May the FDP, a low-tax party known as the Liberals, also risks extinction in the assemblies of two much bigger states, including North Rhine-Westphalia which is Germany's most populous state with 18 million people.
Merkel herself would not write off the FDP, telling a news conference there was "no comparison" between Saarland and the central government, and no danger of early federal elections before the expected vote in the autumn of 2013.
However, Merkel's lieutenants thought aloud about future alliances. "It's typical of post-war German democracy that in tough times the big parties are open to crossing party frontiers and forming coalitions," said her chief whip, Peter Altmaier.
With support for the FDP also languishing well below the 5 percent threshold nationally, Merkel may have to repeat the coalition with the SPD which she led from 2005-09.
If the Saarland coalition goes ahead as planned, the CDU and SPD will share power in five of Germany's 16 federal states.
Merkel aides say her consensus-seeking style of leadership made her more comfortable shacked up with the SPD in the "marriage of convenience," than what initially seemed t o be a "marriage of love" with the FDP.
But the SPD, which emerged somewhat battered from the last federal Grand Coalition when its image suffered from playing second fiddle to Merkel's CDU, may not relish the prospect.
The SPD has a major opportunity to improve its chances against the CDU in the most important strategic of this year's state elections, in North Rhine-Westphalia on May 13.
The SPD had a shaky grip on power in the state, a centre-left stronghold with industrial smokestacks and big debt problems, in a minority coalition with the Greens but called snap elections after the FDP blocked the 2012 state budget.
Opinion polls suggest the SPD and Greens may return with a majority, while the FDP may not reach the 5 percent threshold.
Disappointed at coming off second-best in Saarland, where polls had put them neck-and-neck with the conservatives, the SPD were painfully aware that the prospect of being junior partners in coalition with the CDU does not mobilise centre-left voters.
SPD leaders are keen avoid the impression that a Grand Coalition in the federal Bundestag is a foregone conclusion. SPD Secretary General Andrea Nahles said the best bet was a "Red-Green" alliance with the environmentalists as in North Rhine-Westphalia - though this formula failed acrimoniously in the state of Berlin last year.
"It's true that the prospect of a Grand Coalition does not mobilise SPD voters," said Nahles, emphasising that the party "should bet on 'Red-Green'" at state and national level.
But the view that a Grand Coalition is inevitable is fuelled by the lack of difference between the CDU and SPD on major policy areas, ranging from the euro currency to nuclear power.
This presents a major problem when it comes to campaigning, political scientist Volker Kronenberg said. As in Saarland, if the two major parties are heading for a coalition anyway, "it is just a question of who edges ahead and gets to be premier".
"By next year we will know if you can translate this to the federal level," he said.
In a sign of its desperation, the FDP has begun sniping at what it portrays as the "Social Democratisation" of its current partners in the CDU, trying to present itself as the only party now offering truly liberal economic policies.
It will be an uphill battle for the Liberals: polls predict the party will also be ejected from the assembly in Schleswig-Holstein, meaning a party with a proud history of power-sharing in post-war Germany would have been thrown out of half of the 16 state assemblies. This could signal an irreversible descent.
The two contests are talked about as "dates with destiny" for the FDP, though Kronenberg said there is a slim chance this could mobilise support "under the motto 'it's all or nothing'".
Another small party that in contrast with the FDP is very much on the rise - the Pirates - has a different take on the political differences between the CDU and SPD being erased.
"It no longer makes any sense to classify things as left- or right-wing," said Sebastian Nerz, leader of the party which came from nowhere to take 9 percent in Berlin's local assembly last year, got 7.4 percent in Saarland and may well get into the Bundestag in 2013.
The Greens and FDP are most vulnerable to having their votes poached by the Pirates, but all the parties see them as a threat, despite their lack of any clear political platform.
"My goal is to keep the Pirates out of the Bundestag," said the SPD's Nahles. "They are political competition and are causing a lot of trouble for parties in the centre ground."