The German government has prepared draft rules for an oil and gas extraction technique. It proposes that fracking would be banned in areas where there are water reserves and mineral springs.
In addition, a paper by the economy and environment ministries said rigorous studies into the environmental impact would be undertaken at each proposed site.
Hydraulic fracturing has unlocked immense gas and oil resources since 2007. But it is highly controversial and has been banned in France since 2011.
Chancellor Angela Merkel recently expressed caution about the technology.
Environment Minister Peter Altmaier has promised to introduce legislation on the topic before federal elections are held on 22 September.
"Safety and environmental protection have priority over economic interests," he said in a statement on Tuesday.
Nevertheless, the ministries pointed out that untapped underground oil and gas reserves represent a "significant" source of energy for the future.
"Domestic oil and gas production will continue to make a substantial contribution to the security of supply and price stability in Germany," as the country has pledged to abandon nuclear energy entirely by 2022, the ministries said.