Several papers said on Monday that the only solution was an unprecedented coalition of opposition conservatives, liberals and ecologist Greens.
Others said fresh elections were the only way to break the deadlock.
The front page of top-selling daily Bild showed a beaming Chancellor Gerhard Schroeder saluting his supporters alongside a picture of a grim-looking opposition leader Angela Merkel under a front-page banner headline: "War of the chancellors!"
"Who will rule Germany now? Are new elections the only way out of this chaotic result?" the paper asked.
The paper's editor-in-chief Kai Diekmann expressed respect for Schroeder's performance but insisted there was a "majority for reform" in Germany and a coalition of Merkel's CDU/CSU, liberal FDP and Greens could drive the necessary changes.
"The coming weeks will be the weeks of the Machiavellians and the grand strategists"
Munich's Sueeddeutsche Zeitung
Munich's liberal Sueeddeutsche Zeitung said the election result was a catastrophe for the opposition CDU/CSU and that Merkel's chancellorship had ended even before it had begun.
"The coming weeks will be the weeks of the Machiavellians and the grand strategists," an editorial in the paper said.
The process could end either in a grand coalition between the two main parties or a grouping of Schroeder's SPD, FDP and Greens with Schroeder remaining head of government.
"Game on," said the Frankfurter Allgemeine Zeitung, adding the Schroeder era was now over but that there was all to play for and no other party had won the trust that Schroeder had lost.
Angela Merkel failed to win a
Conservative daily Die Welt said the FDP's surprisingly good performance suggested voters were ready for reforms.
"Germany is confronted by big problems which require leadership and difficult decisions," the paper said.
A "strangely fascinating" alliance of CDU/CSU, FDP and Greens could not be ruled out.
Early official results of Sunday's vote showed Merkel's conservatives scored 35.2%, less than a point ahead of the SPD and up to 14 points down on her poll ratings before the campaign began.
Business daily Handelsblatt spoke of "coalition chaos in Berlin".
Editor Bernd Ziesemer said a remarkable election campaign had ended with a fatal result for Germany:
"Voters made CDU/CSU the strongest party, albeit with a narrow lead, but have denied it a clear reform mandate," said Ziesemer, seeing a grand coalition as the most likely outcome.
"Germany is still uncomfortable with change," he added.
"Both losers want to be chancellor"
Financial Times Deutschland
"Both losers want to be chancellor" said the Financial Times Deutschland on its front page, which also included an article detailing the "bitter disappointment" of German industry.
Merkel would probably still become Germany's first woman chancellor, but her political end was nigh because she had failed even to better the losing share of the vote achieved by 2002 conservative challenger Edmund Stoiber, it added.
Berlin's Der Tagesspiegel said the election result was "an extremely personal defeat" for Merkel and that her days as party leader were numbered if she did not end up chancellor.
The paper's other rival in the German capital, the Berliner Morgenpost, said German voters had obviously been spooked by the prospect of too radical reform.
The Frankfurter Rundschau said it was doubtful whether any government that emerged would last the full four-year term and said fresh elections were a real possibility: "It has never been so easy in Germany as today to call early elections."