Social distancing rules and masks will continue to be required in shops and public transport, Merkel said after a meeting with premiers of Germany's 16 states.

But schools are expected to return to normal operations after the summer holidays. 

"As long as there is no vaccine and no medicine available we must maintain basic measures to protect ourselves," said Merkel.

The ban on large events could affect shows such as the Frankfurt book fair, although Bavarian state premier Markus Soeder opened the door to exceptions, saying some states may "show flexibility while others take a stricter interpretation" on the issue.

Organizers of the Frankfurt book fair, which draws around 300,000 visitors, had until now said they planned to go ahead.

With new infection rates sharply down from highs in March and a death toll significantly lower than those of its neighbors, Germany became the first major EU country to begin easing virus restrictions about six weeks ago.

The government noted that rules to maintain a minimum distance of 1.5 meters as well as requirements to cover up noses and mouths in closed public spaces have helped in the fight against new transmissions.

It is now counting on contact tracing -- both through human trackers as well as through a new app -- to ensure that any new infections are isolated. 

The government added that large-scale testing for the virus would be carried out in places with "groups of vulnerable people".

Merkel has repeatedly warned against complacency before a viable vaccine is found.

Underlining the volatility of the situation, an outbreak in a slaughterhouse in western Germany's Rheda-Wiedenbrueck region led 400 workers to test positive for the virus.

And in one Berlin neighborhood, 370 families living in high-rise flats have been put under quarantine after 70 infections were detected.

Putting "hundreds of families in quarantine is hard work, but it must be done," said Merkel. 

"These outbreaks show us that the virus has not gone away," she warned.