The Federal Office for Information Security, or BSI, urged web users to find an alternative browser to protect security.
The warning comes after Microsoft admitted Internet Explorer was the weak link in recent attacks on Google’s systems.
Hackers in China had pried into e-mail accounts of human rights activists.
The company said, however, that the hole could be closed by setting the browser’s Internet security zone to “high”, although this limits functionality and blocks many websites.
However, German authorities say that even this would not make IE fully safe.
Graham Cluley of anti-virus firm Sophos told the BBC that the warning applied to versions 6, 7 and 8 of the browser.
“This is a vulnerability that was announced in the last couple of days. Microsoft have no patch yet and the implication is that this is the same one that exploited on the attacks on Google earlier this week,” he said.
“The way to exploit this flaw has now appeared on the internet, so it is quite possible that everyone is now going to have a go.”
Microsoft said that while all versions of Internet Explorer were affected, the risk was lower with more recent releases of its browser.
Thomas Baumgaertner, a Microsoft spokesman in Germany, said that the attacks on Google were by highly motivated people with a very specific agenda.
“These were not attacks against general users or consumers,” Baumgaertner said. “There is no threat to the general user.” — Telegraph