German Chancellor Angela Merkel's conservatives and the Social Democrats (SPD) will continue negotiations on forming a government on Monday because they still have differences on some issues, a senior SPD member said.

The conservatives and SPD had set themselves a deadline of today to agree on renewing the "grand coalition" that has governed since 2013, but disputes over healthcare and labour policy remain.

"We had a very constructive day today and we reached a lot of agreements," said SPD General Secretary Lars Klingbeil.

He added that negotiators had, however, realised they were still far apart on some issues and they wanted to talk about those in detail.

"We've decided together that we won't have a night session tonight but rather that we will continue our negotiations and discussions in a detailed and focused way herein Willy Brandt House from 10 o'clock tomorrow," he said, referring to the SPD headquarters.