The security flaw, which affects hundreds of millions of Internet Explorer browser users around the globe, publicly surfaced over the weekend.
Microsoft had said on Monday that attackers can exploit the bug to infect the PC of somebody who visits a malicious website and then take control of the victim's computer.
The German government's Federal Office for Information Security, or BSI, said that it was aware was aware of targeted attacks and that all that was needed was to lure web surfers to a website where hackers had planted malicious software that exploited the bug in Internet Explorer to infect their PCs.
"A fast spreading of the code has to be feared," the German government said in its statement.
BSI advised all users of Internet Explorer to use an alternative browser until the manufacturer has released a security update.
Officials with Microsoft did not respond to a request for comment on the move by the German government.
The company late on Monday urged customers to install a piece of security software as an interim measure, buying it time to fix the bug and release a new, more secure version of Internet Explorer.
Microsoft did not say how long that will take, but several security researchers said they expect the update within a week.
The free security tool, which is known as the Enhanced Mitigation Experience Toolkit, or EMET, is available through an advisory on Microsoft's website.
The EMET software must be downloaded, installed and then manually configured to protect computers from the newly discovered threat, according to the posting from Microsoft. The company also advised customers to adjust several Windows security settings to thwart potential attackers, but cautioned that doing so might impact the PC's usability.
Some security experts had said it would be too cumbersome for many PC users to implement the measures suggested by Microsoft. Instead they advised Windows users to temporarily switch from Internet Explorer to rival browsers such as Google Inc's Chrome, Mozilla's Firefox or Opera Software ASA's Opera.
Internet Explorer was the world's second-most widely used browser last month, with about 33 per cent market share, according to StatCounter. It was close behind Chrome, which had 34 per cent of the market.