Daimler will recall 774,000 Mercedes-Benz vehicles fitted with illegal software which masks diesel emissions after the German Government ordered the recall 238,000 in its home market.

The country’s automotive regulator, KBA, determined that diesel versions of the Mercedes C-Class, Vito and GLC models should be affected by the action, which follows negotiations between the premium car marker and the German authorities.

The BBC reported that German Transport Minister Andreas Scheuer said on Monday that the ministry and Daimler had "negotiated intensively for many hours".

Scheuer said that the government was ordering “an immediate formal recall because of prohibited shutoff devices,” it reported.

Daimler, which has denied any wrongdoing throughout the fallout from Volkswagen’s dieselgate scandal, which was exposed in September 2015, appears to have side-stepped any threat of a fine with its recall, which will see the replacement of engine software.

Arndt Ellinghorst, an analyst with Evercore ISI in London, said: “With this recall, fines are off the table.”

He added: "The criticised software is part of engine management and so called auxiliary emissions control devices .

"We don't see any evidence that Daimler was designing software to deliberately cheat on emission testing."

In August last year Mercedes-Benz dealers in the UK were called on to apply software upgrades to “several hundred thousand” diesel engines as part of a bid to cut nitrogen oxide emissions on three million vehicles globally.

Only the two-litre turbodiesel fitted to the latest E-Class saloon and a V6 turbodiesel in the soon-to-be released S-Class were exempt from the voluntary operation.

All Euro 5 and Euro 6 standard diesel engines registered in Europe between January 2011 and September 2015 were affected by the £195 million “service action”, which was the largest manufacturer-led operation to reduce diesel emissions since Volkswagen pulled 11 million vehicles off the road over the so-called dieselgate scandal.

Speaking to AM at the time, a spokesman for Mercedes-Benz UK, said that there was little similarity with the situation faced by Volkswagen, however. He said: “This is not a recall – something required of Mercedes-Benz by the government and the DVSA – but a pro-active measure to ensure our diesel vehicles are as clean as they can be.

“It’s part of a strategy that we hope will ensure diesel continues to be perceived as a clean fuel that has a long future ahead of it.”

BMW recalled 12,000 diesel cars over a diesel emissions issue in February, while Porsche recalled 60,000 in May. Neither have admitted wrongdoing, the BBC said.