Europe's biggest economy had begun easing restrictions, first reopening schools in late February, before allowing some shops to resume business in March.
The Monday meeting between Chancellor Angela Merkel and the leaders of Germany's 16 states was originally scheduled to discuss further relaxation, but a third wave of the virus driven by new variants has changed the agenda dramatically.
Lifting restrictions on dining, cultural and leisure facilities will now have to be delayed and instead, worst-hit areas may from Monday have to reimpose restrictions and order shops to close again.
"Without significant restrictions, the number of new infections will increase to the point that the health system risks being overwhelmed by April," the draft reads.
Requirements that employees work from home whenever possible will be extended to April 18, according to the document, instead of ending on March 28.
To prevent any contagion at the workplace, companies will be required to provide at least two rapid tests a week to employees who are unable to work from home, it said.
With an eye on upcoming Easter school holidays, those who go abroad would be required to be tested and go into quarantine when they return to Germany.
Authorities also intend to bring in additional lockdowns at the local level.
On Sunday, the incidence rate of infections measured over seven days reached 103.9 per 100,000 inhabitants.
Merkel and regional leaders agreed at the last round of talks that authorities would tighten the screws again if that rate struck 100.
"Unfortunately, we are going to have to use these emergency brakes," Merkel warned on Friday.
The draft document calls for these brakes to be brought in wherever they are necessary, and to be applied consistently across the country.
It lays the groundwork for the closure of some schools that have only just reopened, and urges people to avoid travelling over Easter.
Shop-owners were watching developments nervously, with the German retailers' association warning that 120,000 shops could go bust if the shutdown persists.
"Given the current infection dynamics accelerated by the Covid-19 variants, forceful action is still required," the text reads.
Health authorities warned on Friday that coronavirus case numbers are rising at a "very clearly exponential rate".
"It is very possible that we will have… very high case numbers, many severe cases and deaths, and hospitals that are overwhelmed," Lars Schaade, vice president of the Robert Koch Institute for infectious diseases, told reporters then.
The grim news came with the country also struggling to accelerate its inoculation campaign.
Dogged by supply issues and mistrust over AstraZeneca's jab, Germany's vaccination campaign has been sluggish compared to the British or US programmes.
The use of AstraZeneca's vaccine was suspended for several days earlier this week by major European countries, including Germany, over fears it may cause blood clots.
After the EU medicines regulator cleared it for use following a review, Merkel herself sought to shore up confidence in the jab.
"Yes, I would take the AstraZeneca vaccine," Merkel said on Friday.
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