Berlin - German Chancellor Angela Merkel was briefing opposition parties early Tuesday on a major rescue package to avert the worst effects of recession on Europe's biggest economy, and was set to make the moves public later in the day.

The cornerstones are to be a fund to bail out struggling industry with loans and an expensive cut in income taxes and state health insurance premiums that will spread the bounty to almost every single working household in Germany.

After a package at the end of 2008 that was derided as puny, Merkel's government is offering what is described as the biggest economic stimulus package in the 64 years since the New Germany emerged from the rubble of the Second World War.

Most Germans saw little sign of recession in their own lives last year, with real estate prices stable. But as export markets slump and business confidence worsens, fears are growing of job losses in the car and machinery industries.

Industry will be offered loans and guarantees, just as the struggling banks were offered their own relief package last year that totalled
480 billion euros (650 billion dollars).

No figures were given for the industry relief package, but officials had earlier suggested a total of 100 billion euros.

The government is to pump 18 billion euros of investment into schools, roads and railways, giving construction a boost.

Cuts in taxes and mandatory health insurance contributions which are taken out of most Germans' pay will cost the government a total of 18 billion euros, senior party officials told reporters.

In total, the various moves are expected to load nearly 50 billion euros on to the federal budget over the next two years, driving up government borrowing beyond the usual limits imposed by the European Union.

After weeks of wrangling among the three parties in the Merkel coalition, the deal emerged surprisingly quickly in a six-hour meeting Monday of Merkel's Christian Democratic Union (CDU), the Bavarian Christian Social Union (CSU) and the Social Democrats (SPD).

Merkel let junior party officials brief the press. She met Tuesday with the caucus leaders of both the governing and opposition parties, and reserved her own appearance before the media until later in the day.

Peter Struck, leader of the SPD caucus in the Bundestag parliament, said the atmosphere had been good, and it was hoped legislation could be passed quickly so that key changes in tax and other laws could take effect on July 1.

The car industry is to receive special aid of 1.5 billion euros in the form of a buy-in scheme for older cars. Consumers who buy a new car and send their old vehicle to the crusher will receive a handout of 2,500 euros.

At Tuesday's official announcement, Merkel is to share microphones with Foreign Minister Frank-Walter Steinmeier, who is deputy chancellor and the SPD's nominee to replace her in the general election set for September this year.

He is deputy leader of her party, but is being given pride of place at public events as the SPD focusses on campaigning. The announcement will also be made by Bavarian Premier Horst Seehofer, who is leader of the CSU. (dpa)