Tuesday's announcement marks a reversal from earlier this month when state leaders agreed to begin a cautious reopening process.
Talks between leaders of Germany's 16 federal states and Merkel lasted until the early hours of the morning following a lengthy interruption.
What are the new measures?
As well as prolonging existing measures such as the closure of cultural, leisure and sporting facilities, tougher restrictions will apply over the Easter period.
- Churches will be asked to hold services marking the Christian festival online. - No more than five adults from two households will be able to meet over the five-day period. - Testing and vaccination centers can remain open. - Public gatherings will be prohibited. - Almost all shops will be shut during the five days. Only grocery stores may open on Saturday, April 3. - Anyone from Germany holidaying abroad will have to be tested before boarding a flight back to Germany. - The "emergency brake" will halt further re-openings and will apply to areas exceeding 100 new cases per 100,000 inhabitants over a seven-day period.
If an area has an incidence rate of over 100 for three consecutive days, harsher lockdown measures will once again apply.