UPDATE 3-German Social Democrats give Merkel coalition a chance

* New SPD leaders set out vision to revive party

* Party backs motion outlining demands to make to conservatives

* New leaders emphasise investment over fiscal rectitude (Recasts after vote on coalition demands, adds details)

By Madeline Chambers and Paul Carrel

BERLIN, Dec 6 (Reuters) - Germany's Social Democrats (SPD) voted on Friday to give their coalition with Chancellor Angela Merkel a chance of survival, setting out relatively modest demands as their price for staying in government with the conservatives.

At a party conference, delegates appointed two critics of the coalition to jointly lead their party after months of turmoil and dismal performances in regional and European elections. Some party members want to quit government and rebuild in opposition.

In a show of hands, a large majority of delegates voted for conditions they will set out to Merkel's party to stay in government, including tougher climate protection measures, a rise in the minimum wage and investment in infrastructure.

"This is a clear recommendation for how to act in the next weeks and months," senior party member Anke Rehlinger told delegates.

The conservatives say they will not renegotiate the 2018 coalition deal but the relatively modest demands set out by the SPD's new leaders appear to avoid a direct confrontation with Merkel's CDU/CSU bloc.

A majority of delegates also voted explicitly against leaving the coalition.

Co-leader Saskia Esken said she was dubious about staying in the coalition but was ready to give it a chance.

"I was, and am, sceptical about the future of this grand coalition. But with this resolution, we give the coalition a realistic chance of continuing - no more, no less," Esken said.

Merkel protege and CDU chief Annegret Kramp-Karrenbauer congratulated the new leaders and said there was much to do.

"For that, we need a clear commitment to our common task. We are ready for that," she tweeted.

Esken drew loud applause from delegates when she said the minimum wage must rise to at least 12 euros an hour from 9.19 euros.

Her co-leader, Norbert Walter-Borjans, outlined a vision of a socially just country with clean air, digitalised industry and first-class education. Achieving this must take priority over rigidly adhering to self-imposed fiscal rules, he said.


Many conservatives are committed to achieving a balanced budget without issuing new debt.

"If we leave behind a lower debt level but the environment is poisoned, infrastructure is dilapidated and Germany has gone backwards technologically, it would be a far worse debt to hand on to the next generation," Walter-Borjans said.

He also rapped the conservatives' stance on defence, saying the deployment of German troops "in as many places as possible in the world" was utterly wrong.

"That is the militarisation of foreign policy," he said.

The delegates, from all Germany's federal states, formally endorsed last weekend's election by 426,000 SPD party members of Esken and Walter-Borjans as co-leaders.

They face a daunting task. An opinion poll on Thursday put the SPD on 13%, just off record lows and trailing the conservatives, Greens and far-right Alternative for Germany.

Ditching the coalition could trigger a snap election or a minority government, unattractive options for both ruling parties and for many Germans.

Even the head of the SPD youth wing, Kevin Kuehnert, who has campaigned against the grand coalition, appealed to delegates to back the new leaders to hold talks with the conservatives.

"They deserve our trust," he said.

( Editing by Gareth Jones and Giles Elgood)