The government says military service will be voluntary for as long as possible, but from July 2027, all 18-year-old men will have to take a medical exam to assess their fitness for possible military service.
Universal medical examinations were necessary, Defence Minister Boris Pistorius said, so that in the event of an attack, Germany would not waste time determining "who is operationally capable as a homeland protector and who is not".
Germany's army, the Bundeswehr currently has around 182,000 troops and Pistorius wants to increase the number of soldiers in service by 20,000 over the next year.
The long-term aim is to raise the number by the early 2030s to 260,000, supplemented by approximately 200,000 reservists, to meet new Nato force targets and strengthen Germany's defences.
While the plan is for voluntary service, if the security situation worsens or if too few volunteers came forward, a form of compulsory military service could be considered by the Bundestag.
If war were to break out, the military would be able to draw on the questionnaires and medical exams for potential recruits.
Like other European countries, Germany ran down its armed forces during the peacetime years of the 1990s. During the Cold War it had an army of almost half a million.
Compulsory military service in Germany was ended in 2011 under former chancellor Angela Merkel.
But now, in the face of perceived threats from Russia and heavy pressure from Germany's traditional ally, the US, Friedrich Merz has pledged to rebuild the Bundeswehr into Europe's strongest conventional army.
Nato countries have come under pressure from US President Donald Trump's White House to increase their spending on defence.
Incentives for voluntary service are relatively high, with a promised salary of about €2,600 a month. In France, volunteers will be paid at least €800 (£700) a month.
The Bundestag was also set to vote on Friday on a contentious pensions reform bill, which will keep the state pension at current levels until 2031.
The bill is a key pillar of the coalition deal between Merz's conservatives and his centre-left partner, the Social Democrats, who have just a slender governing majority of just 12 votes.
However, there had been doubts about whether it would pass the parliamentary vote, as younger members of Merz's conservatives threatened to rebel. They say the plan is financially unsustainable and will leave younger generations shouldering the burden.
But Germany's opposition far-left Left party said it would abstain from voting, which means the coalition needs fewer votes to pass it and so won't have to worry about potential rebels from its own ranks.
A government crisis may narrowly have been averted.
