Germany's transport ministry has ordered Volkswagen to recall 2.4m vehicles with "defeat devices" over the next year, raising questions over how many cars will be recalled in the UK.
The car giant said around 1.2m cars in the UK have been affected by the scandal, adding that customers will be contacted about bringing their vehicles in to be refitted.
Some 508,000 VW cars, along with nearly 400,000 Audi vehicles, 132,000 Skodas and 77,000 Seats are affected. A further 80,000 commercial vehicles are also on the list.
The UK government has launched an investigation into the scandal, and Volkswagen's UK managing director Paul Willis has been grilled by the parliamentary Transport and Environmental Select Committees this week.
Local media reported that the German transport ministry (LBA) rejected VW's plan for car-owners to voluntarily bring their cars in to be refitted and have the software, which allows the cars to cheat emissions tests, removed. Instead it will be a statutory recall, beginning in January.
The car giant said in a statement it "welcomes the swift decision by the Federal Motor Transport Authority (KBA) and added:
Work on the technical solutions detailed in the plan of measures is currently proceeding at full speed. Remedial action on the vehicles will begin in January 2016 – at no cost to our customers. The technical solutions can involve software as well as hardware measures.
These are currently being developed for each affected series and each affected model year. All measures will first be presented to the responsible authorities. Volkswagen will subsequently inform the owners of these vehicles over the next weeks and months.
VW has set aside €6.5bn (£4.8bn) to cover the costs of the scandal, but experts believe the final bill could be much higher, and the company has already been forced to admit it is slashing investment by €1bn-a-year to cover the cost of the scandal, which involves 11m cars worldwide.
Some analysts have suggested the total cost of fines and refits and lawsuits will be as much as €35bn, which would wipe out the company’s cash reserves.
VW's share price was down (again), trading 2.81 per cent lower.