Merkel on Monday appointed close ally and confidante Annegret Kramp-Karrenbauer as secretary general of her Christian Democratic union (CDU).
The German Chancellor's promotion of Mrs Kramp-Karrenbauer is unlikely to impress those on the right of the party, although Mrs Merkel may seek to placate them by offering a cabinet postion.
Engaged in local CDU politics for more than three decades, Mrs. Kramp-Karrenbauer has made a name for herself as a successful regional politician in Germany's smallest state, Saarland.
The surprise reshuffle comes after Tauber said at the weekend he was stepping down for health reasons, and with Merkel struggling to form a new government after a tricky general election last September.
Kramp-Karrenbauer announced her resignation as premier of Saarland, saying that it had not been an easy decision. That potentially puts Kramp-Karrenbauer on the path to replace Merkel as Germany's federal chancellor.
Though Merkel has said she is available as chancellor for four years, the succession debate has been supercharged by the inclusion of a clause in a coalition deal with the Social Democrats (SPD) that envisages a review of the next government's progress after two years to assess whether any changes to its mission are needed.
After then-SPD leader Martin Schulz appeared to pose a real challenge to Dr Merkel early previous year, Mrs Kramp-Karrenbauer's effortless re-election was taken as the first sign that the CDU had nothing to fear.More news: PNB scam impact: Bank stocks tumble; Sensex dives 236 pts
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She is described as a pragmatic and unpretentious politician seen as a safe choice to preserve Dr Merkel's legacy.
"There's not a task you can't trust Annegret with", the CDU's then-Saarland premier Peter Mueller said in 2000 when AKK became Germany's first woman to be named state interior minister.
She first caught the national spotlight last March, when she stormed to victory in a state election seen as a test of Germans' mood just months ahead of September's nationwide polls.
Merkel's conservative bloc gained 2.5 percentage points to reach 32 percent and the AfD was up 1 percentage point to 16 percent while the SPD fell 1 percentage point to 15.5 percent, the weekly poll showed on Monday.
"She's very centrist, also very good at unifying the party, like Merkel", he said, adding that on the other hand, it is hard to find any real conviction in her.
The deal is still subject to a ballot by the SPD's deeply divided base of 470,000 rank-and file members.
The outcome is considered wide open as the SPD's youth and left wings are fiercely opposed to another term governing in Merkel's shadow.