The ministry statement did not say whether those cars outside of Germany would be recalled. Last year, Mercedes-Benz retrofitted roughly 3 million cars with modified emissions controls to bring those cars into compliance with Euro 5 and Euro 6 regulations.
German authorities have also discovered special programming in Daimler cars that they have classified as "inadmissible".
It relates to four-cylinder turbo-diesel engines fitted to Euro6-compatible 220d variants of the C-class and GLC SUV, as well as the Vito van.
Since rival Volkswagen admitted in 2015 to cheating US emissions tests, German carmakers including VW, Daimler and BMW have faced a backlash against diesel technology in which they have invested billions of euros.
In a statement issued on Monday, the German transport ministry said: 'The government will order 238,000 Daimler vehicles to be immediately recalled Germany-wide because of unauthorised defeat devices'.
Just two months ago in April, Zetsche said Mercedes-Benz customers are showing more confidence in diesel by continuing to buy them in significant numbers.
The Mercdes GLC is among the affected models
Germany's road vehicle authority KBA has found five "illegal switch-off devices" in Daimler auto engines, newspaper Bild am Sonntag (BamS) reported on Sunday.
Daimler hasn't denied the existence of the functions, but have refuted the suggestion that they are illegal. It's unclear exactly which models are being recalled, but the Vito 119 CDI, C 220 d and GLC 220 d have been identified, according to Autocar.
A spokesman for the company declined to comment on specifics regarding the case, but said: "We are cooperating to a full extent and transparently with the KBA and the federal transport ministry".
Mercedes-Benz said it had developed a technical solution that would enable it to update the software, and Zetsche suggests the move could see the company avoid possible fines by the European Union.
'For the existence of the relevant test cycle NEDC, the specific programming in question is not required'.
Ellinghorst estimated the cost to Daimler to be less than 100 million euros. "Overall, this outcome should de-risk the stock".