Similar to Volkswagen's dieselgate scandal, it means these cars produce increased emission of harmful nitrogen oxides in the hands of customers compared to when they're tested for type approval by regulators.
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".
The Transport Ministry said Monday that up to 774,000 Mercedes cars were affected by the switch-off technology in Europe, mentioning the already recalled Vito van as well as Daimler's GLC 220d and C 220d models.
Germany's Transport Ministry has ordered an official recall for 238,000 vehicles sold in Daimler's home market.
Daimler CEO Dr Dieter Zetsche was ordered to appear in front of the KBA late last week and insisted the meetings were "constructive".
Mr Scheuer said that Daimler was willing to work "with co-operative transparency" with the government and "at maximum speed". The affected auto models are only sold in Europe and include the Mercedes-Benz Vito commercial van, C220d sedan, and GLC220d crossover SUV.
The ordered recall follows Daimler's decision to voluntarily recall three million vehicles in the European Union a year ago to perform software updates and improve emissions performance.
This recall follows after Scheuer met Mercedes-Benz chairman, Dieter Zetsche, in Berlin to discuss what has been described as "irregularities in independent test results of various Mercedes-Benz models featuring the German vehicle maker's turbocharged four-cylinder diesel engine".
Daimler head of communications Jorg Howe confirmed the recall, but the company has not specifically admitted wrongdoing.
This is specifically linked to two functions of the engine control in Mercedes-Benz Vito vans. "Open legal questions will be clarified in the objection proceedings".
"We don't see any evidence that Daimler was designing software to deliberately cheat on emission testing".
Evercore ISI analyst Arndt Ellinghorst predicted the costs for the required software update for Daimler would be less than 100 million euros ($118 million).