German foreign minister Frank-Walter Steinmeier, who will challenge Angela Merkel next year for the chancellor’s job, has strongly rejected accusations that he allowed German spies to assist the US war-effort in Iraq.

Giving evidence before a parliamentary investigative committee, the Social Democrat contender in next year’s election on Thursday branded as “absurd” claims that two of the country's agents stationed in Baghdad in 2003 had passed tactically-important information to the US military.