Schroeder, needing a knockout punch with his Social Democrats trailing Merkel's Christian Democrats by a double-digit margin, launched straight into a defence of his welfare-state and labour-market reforms.

He also immediately sought to score points with his popular opposition to the US-led war in Iraq.

Iraq issue

"I am asking for confidence in the policies that I have carried out, policies aimed at readjusting the social security systems that were neglected in the 90s" under a previous conservative government, Schroeder said.

"We are the ones who tackled the structural problems."

Merkel's party is ahead of
Schroeder's in opinion polls

He also claimed credit for "a foreign policy that has positioned Germany abroad as a middle-sized power for peace, which contributed - and I had to take some criticism for that - to keeping Germany out of the Iraq war, for example".

Merkel shot back with a barb at Schroeder's struggles over the past two years to overcome resistance within his Social Democrats to his limited reform drive, which she proposes extending.

"Germany can only be a strong, reliable partner in the world if we are also economically strong, and that is where we are lacking - and, unlike the chancellor, I can be sure with my party colleagues that we will support this course of modernisation together," she said.

"We must do everything to say: Priority for jobs," Merkel said.

Almost even

Neither candidate appeared to land the kind of telling blow that Schroeder did in a 2002 debate against then-challenger Edmund Stoiber, whom he flummoxed with a direct question about whether Stoiber would send German troops to Iraq.

A poll of 1276 people carried out for ARD television after the debate found that 49% believed Schroeder - a seasoned television performer - fared better overall, against 33% for Merkel.

The debate could determine what
coalition emerges from the polls 

The channel cautioned that the result was in line with expectations and could not be translated into voting intentions.

The poll found that Merkel was more convincing on jobs and family issues, but Schroeder was better on tax, pension and foreign policy.

Merkel has centred her campaign firmly on the German economy's stagnation and the country's persistently high unemployment rate - currently 11.4%.

Turkey

Still, she underscored during Sunday's debate her opposition to Turkish membership of the EU, arguing that "the EU does not have the capacity of integration to take in Turkey as a full member".

Merkel proposes offering Turkey a "privileged partnership" instead.

Merkel voiced her opposition to
full EU status for Turkey

"We have a great deal of approval" for that stance, she added. "It would be entirely irresponsible now to awake in Turkey expectations of full membership ... and then be unable to implement that."

Schroeder shot back that "you are making a major foreign policy mistake".

"You do not understand what geostrategic, what geopolitical significance linking Turkey to the EU has," he said.

Country's problems

While Schroeder was heavily favoured to emerge the winner from the 90-minute encounter, Merkel, whose campaign style has often been restrained, argued as aggressively as the chancellor.

Schroeder accused Merkel of exaggerating Germany's problems.

"You have to make clear abroad that you are proud of this country," he said. "You are speaking negatively about the strength of this country, about the people in this country."

"Germany can only be a strong, reliable partner in the world if we are also economically strong"

Angela Merkel,
Christian Democrat leader 

"I am just saying that this country is being governed well below its potential," Merkel replied.

The challenger renewed a proposal to reduce an "ecological tax" on fossil fuels introduced by Schroeder's government.

That prompted Schroeder to retort that any benefits would be eliminated by her plan to increase value-added tax in an effort to reduce Germany's high non-wage labour costs.

"We have to have lower non-wage labour costs to have more jobs," Merkel said.

Flat tax

The chancellor attacked the star of Merkel's campaign team, finance spokesman Paul Kirchhof, who has advocated a flat income tax rate of 25% - a proposal that Merkel says she will not implement.

Kirchhof also has stirred controversy with talk of radical pension reform.

"You cannot make an entire people guinea pigs for Mr Kirchhof," Schroeder said.

Although Merkel's party is well ahead, it is less clear whether it and the pro-business Free Democrats will muster enough votes to form her preferred coalition.

If they fall short, Merkel could be forced into a so-called "grand coalition" with Schroeder's party.

Experts have argued that Sunday's debate - the only one-on-one encounter of the campaign - could help determine what coalition emerges from the election.