It said it had already launched a service action for other models and that, "in order to effectively improve the emissions of additional model series, Daimler has now decided to extend the service action to include over three million Mercedes-Benz vehicles".
The Stuttgart-based company said the action would cost the company some 220 million euros ($255 million) and be free of charge for customers.
"In this way, Daimler is making a significant contribution to the reduction of nitrogen-oxide emissions from diesel vehicles in European inner cities," it said in a statement.
The recall would start in coming weeks and, "due to the large number of vehicles", take "a longer period of time".
A week earlier, German media reported that Daimler had manipulated the engines of around one million diesel vehicles to make them appear less polluting, raising echoes of competitor Volkswagen's 'dieselgate' scandal.
Sueddeutsche Zeitung daily and two public broadcasters, citing a court-issued search warrant, said the company "sold vehicles with higher levels of damaging emissions than allowed for almost a whole decade between 2008 and 2016, in Europe and the United States".
Investigators suspect Daimler used a similar so-called "defeat device" to Volkswagen, which in 2015 admitted to manipulating emissions readings on some 11 million diesel vehicles worldwide.
At the time, a Daimler spokeswoman contacted by AFP declined to comment on an ongoing investigation, but said the carmaker was cooperating with the authorities.
In its latest statement, Daimler said Mercedes-Benz had developed a completely new diesel engine family that could meet stricter EU emission regulations to come.
"The public debate about diesel engines is creating uncertainty -- especially for our customers," said Dieter Zetsche, chief executive of Daimler AG and head of Mercedes-Benz Cars.
"We have therefore decided on additional measures to reassure drivers of diesel cars and to strengthen confidence in diesel technology," he said.
"We are convinced that diesel engines will continue to be a fixed element of the drive-system mix, not least due to their low CO2 emissions."
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