The announcement came as chancellor Angela Merkel spoke to mayors from German cities, hoping to discourage them from banning diesel cars, the Associated Press report said.
The mobility fund will be increased to €1 billion and be used to fund projects from traffic management systems to encouraging electric cars, Merkel said.
The auto industry had agreed to fund half of the previously planned Euro 500 million fund and German vice chancellor Sigmar Gabriel said he expects the industry to contribute to the increase in the fund, Associated Press said.
The fund was agreed last month by car manufacturers hoping to avoid the threat of vehicle bans in cities, Reuters reported at the time. The manufacturers also promised to update software in vehicles to cut emissions.
In a recent television interview Merkel said that diesel and other combustion engines are "bridge technologies" and that diesel cars will be needed "for decades more", Deutsche Welle reported.
