Chief federal prosecutor Harald Range told legislators an investigation into the allegations would be opened, but the inquiry will be restricted to alleged bugging of Merkel's cellphone. It will not investigate claims the NSA engaged in wide-scale spying on data connections and corporations in Germany.
Range's announcement is seen as a reversal of plans, since last week it appeared no investigation was planned. He has been under increasing pressure to investigate the NSA's surveillance in Germany, and Merkel has demanded an explanation from the NSA.
The allegations have cooled relations between Washington and Berlin.