Should I choose someone as one of my references while I also have applied to his group? I just faced a funny, yet complicated situation! 

I want to apply for postdoc positions, and one of my references would be a professor that I had a good collaboration with his group during my PhD. However, I ran into him a few days ago and informally asked if he has any available position in his lab. He said that he is too busy now but likes to sit together and talk about it 4 weeks from now! 
Although I liked the idea, it'd be too risky for me to wait that long until I see if our meeting could result in a position or not. So, I want to proceed with my position search meanwhile!

The issue is that I'm not sure how the professor would see it (or react) If anyone contacts him as one of my references for my postdoc applications! Even I am not sure how to tell him that want to add him to my reference list! In fact, I am afraid to lose the chance of working with him as well as his positive recommendation for my applications?

BTW, If it helps, the country is Germany, and the field is computer science!
Since you seem to know him pretty well, you might think about just asking him. He knows you need a position and that he might not be able to give you one. Yet he supports you, I think. You also would prefer to work with him. As long as all of that is clear and in the open and can be stated, it seems fine to ask for a recommendation. 

But that is the sort of conversation to have face to face, I think. It might not be possible to do that as he is busy, of course, so you might have to resort to email. But if you do, lay it all out so that he understands you are applying for a "backup" situation in case he can't hire you. 

But if any part of my analysis is faulty, you might need to be more cautious and omit him as a reference for now. You can ask again later if nothing current bears fruit.