Car industry bosses agreed to a request from national and state governments on Wednesday to upgrade software on some 5.3 million diesel vehicles.
That figure - which applies to most German diesel cars made since 2009 - would include 2.5 million cars already set to have software updated by Volkswagen. The upgrades would be carried out entirely at the expense of manufacturers, it was announced.
The VDA auto industry group says the aim is to reduce nitrogen oxide emissions by 25-30 percent in the vehicles.
Details of a wider package aimed at improving air quality were announced at a press conference after auto sector delegates met top politicians in Berlin to discuss action to reduce harmful diesel emissions.
Transport Minister Alexander Dobrindt said he believed the summit had achieved a "sensible basis" for a speedy reduction of emissions.
The agreement, which also includes a 250-million-euro pledge from the government to invest in public transport, was described as a "first step" by environment minister Barbara Hendricks. "Of course, the result we achieved today will not be enough in the end," said Hendricks.
Environmentalists, who had called for cars already on the road to be given expensive hardware changes and for diesel technology to be phased out, expressed disappointment.
Hubert Weiger, chairman of Germany's Federation for the Environment and Nature Conservation, said it was not enough for carmakers to escape the possibility of driving bans being imposed on their vehicles.
"Once again, car manufacturers have prevailed over the interests of consumers and environmentalists," said Weiger. "With the decision for only having software updates, which themselves are not mandatory, driving bans are going to be inevitable,"
Last week, a court in Stuttgart - the home of Mercedes and Porsche - ruled that only a partial ban on diesel vehicles would be effective at clearing the air of poisonous nitrogen oxide. The court ruled that public health outweighed the rights of diesel car drivers, a decision that would pave the way for other cities to impose their own bans.
Diesel emissions have been shown to be worse than emissions from other fuels in causing cancer and damage to the heart and lungs. Car producers are under pressure to lower the amount of chemicals such as unburned hydrocarbons in emissions.
The summit venue was changed at short notice after protesters rallied outside the Transport Ministry where, shortly before dawn, Greenpeace activists had managed to reach the roof. The protesters were able to unfurl a banner with the words "Willkommen in Fort NOx" (welcome to Fort NOx), referring to the pollutant Nitrogen oxides which are particularly prevalent in diesel emissions.
The venue was switched to the Interior Ministry for "technical" reasons. Environmentalists had been critical of the proceedings after rumors that the government would insist only on the software changes.
Major problems arrived for the diesel sector in September 2015, when Volkswagen admitted installing illegal devices in millions of vehicles across the world that would help them to falsely pass pollution emissions tests by going into a "test mode."
Suspicions later surfaced that other German carmakers, including Mercedes-Benz maker Daimler and BMW, might have done the same.
Too little, too late?
Car industry expert Thomas Sattelberger said that - with active campaigns against diesel across Europe - German carmakers were losing time in adapting their business model.
"In a two-hour summit, without the chancellor, you really won't find deep solutions, you will probably find solutions for how to avoid a driving ban, and how to meet the requirements for unburned hydrocarbons, but nothing more," said Sattelberger.
rc/rm (AFP, dpa, Reuters)