German Chancellor Angela Merkel is planning a nationwide "lockdown light" which could force the closure of bars, restaurants and public events, according to Bild newspaper.
Merkel is expected to push for the measure in a meeting with regional leaders on Wednesday where additional curbs are likely to be decided on.
Schools and some shops would remain open under the newly-considered restrictions, but they would mark a major escalation in Germany's coronavirus response.
The country reported 8,685 new coronavirus cases on Monday.
Infections have been increasing by sometimes record numbers over the past two weeks although they are lower compared to many other European countries.
A second county to enter lockdown
The Bavarian county of Rottal-Inn is to enter a de-facto lockdown on Tuesday. Schools and kindergartens will be closed while public events will be cancelled.
Rottal-Inn recorded well over 200 new infections per 100,000 people over the past week — districts are required to take action once new infections top 50 per 100,000.
This is the second county in the state of Bavaria to face a lockdown: Berchtesgaden entered lockdown on October 20.
Nuremberg, which is also in Bavaria, has cancelled its big Christmas market, one of the best-known in the country.
The Christkindlesmarkt is usually a huge tourist draw, but due to rising COVID-19 cases mayor Marcus Koenig said leaving it open would send the wrong signal.