Chancellor Angela Merkel of Germany and her centre-left coalition partner have cut a deal which strengthens the chances of Jean-Claude Juncker becoming the next chief of the EU executive, presaging a defeat for David Cameron who has vowed to fight Juncker's appointment to the bitter end.

Sigmar Gabriel, the German vice-chancellor and leader of the Social Democrats (SPD), joined Merkel in backing Juncker for the job of European commission president while dropping demands that Martin Schulz, the outgoing German president of the European parliament, be made the German commissioner in Juncker's team.

The deal in Berlin came as the EU's centre-left government leaders prepared to meet in Paris on Saturday to coordinate positions ahead of what promises to be a turbulent EU summit next week focused on Juncker, the former Luxembourg prime minister.

Following last month's European elections, leaders are to meet for a summit on Thursday and Friday to debate who should be the next commission chief.

Cameron has waged a loud and aggressive campaign in what looks like a doomed attempt to sway minds against Juncker. Officials in Brussels say the Cameron campaign has been driven by Conservative party politics, with fateful implications for Britain's future in Europe.

The deal in Berlin suggests that domestic party politics in Germany have played an even bigger role in resolving the controversy over Juncker and the EU's future leadership team.

Schulz led the European social democrats in the recent election as contender for the commission job while Juncker, with Merkel's backing, led the campaign for the Christian democrats who won, making the Luxembourger the frontrunner. Cameron had no say in either candidacy since the Conservatives are aligned with neither grouping after the prime minister parted company with Europe's Christian democrats in 2009.

"The SPD will accept a commissioner from [Merkel's] CDU," Gabriel told Der Spiegel, "provided Schulz is elected president of the European parliament".

That represented a climbdown. The SPD had previously threatened to block Juncker in the necessary vote in the European parliament unless Schulz was named by Merkel as the new German commissioner.

Schulz told the Guardian last week that Juncker had offered him the post of vice-president of the commission and also warned that it would be "easier" for the SPD to support Juncker in a vote if he was assured of the job.

It is not clear how the Berlin deal will go down in the rest of Europe and whether Merkel, the most powerful leader in the EU, will get her way. But it suggests she will push to have Juncker nominated next week. If she does, Cameron will insist on a vote at the summit, will vote against, will force other leaders to show their true colours on Juncker, and will probably lose in the qualified majority vote.

Until now, these decisions have always only been taken by consensus by national EU leaders.

Juncker is the candidate for the centre-right. Paradoxically, he seems to enjoy stronger support in the opposition camp than in his own. Several EU centre-right leaders – in Britain, Sweden, Hungary, the Netherlands, and partly in Germany – have reservations about Juncker.

Saturday's centre-left summit in Paris is likely to agree to support Juncker. President François Hollande and the new star of the European centre-left, Matteo Renzi, prime minister of Italy, will be joined by Gabriel and Schulz, as well as the government chiefs of Austria and Belgium.

They are certain to qualify their support for Juncker by demanding concessions on European austerity policies, infrastructure investment, and gaining more time to reduce public spending burdens.

While Merkel will resist attempts to relax fiscal rigour across the EU, the chair of next week's summit, Herman Van Rompuy, is expected to come up with a formula enabling everyone – except Cameron – to save face and claim victory.