Her efforts to create a three-way government with the liberal FDP and Greens failed after weeks of negotiations following the election.
The SPD, which saw its participation in a Merkel-led coalition government from 2013-17 rewarded with its worst election result in German post-war history, had been strongly opposed to another "grand coalition".
Chancellor Angela Merkel's conservatives urged Germany's Social Democrats (SPD) not to block a last-ditch attempt to cobble together a governing coalition by drawing policy red lines that could prolong deadlock in Europe's largest economy, Reuters reports.
Firmly denying that an agreement had been reached on opening negotiations on a grand right-left coalition, Schulz said that all options remained on the table. "The way that erroneous reports are circulated destroys trust".
Ties between the SPD and conservatives - still sharing power in a caretaker capacity - have already been strained this week after a conservative minister backed extending the use of a weedkiller at the European Union level against the SPD's wishes and without its prior knowledge.
On Friday, her party reiterated that stance, with the CDU's Klaus Schueler saying after a telephone conference of the party leadership: "The CDU is ready to hold serious talks with the SPD to build a stable government". We should talk about each of these options.
Schulz told reporters Friday that they'd agreed to keep their discussions confidential, but that he was now prepared to discuss with his party's leadership on Monday all options, including re-forming a grand coalition.
Ahead of that congress, which will also decide whether to re-elect Schulz as chief of the SPD, the party's top brass has been careful to tread softly regarding its options.
However, several leading Social Democrat politicians have supported a coalition or are backing a minority CDU/CSU government.
Merkel's camp said the ball was in the SPD's court.
"The decisive question is what do we want to implement, what can we implement - for example in the renewal of the European Union", Schulz said.