The government has conceded that a private German security firm may have trained members of an elite corps assigned to Libyan leader Muammar Qaddafi.
But it has denied knowing that any German soldiers or federal police took part in their spare time, except for one German sergeant who has been suspended, or that any sensitive material was passed on.
Authorities in the state of North Rhine-Westphalia said Friday that eight members of the regional elite special operations unit (SEK) have been under investigation for possible involvement.
One police officer has confirmed that he took part in the programme, but said that no sensitive material was used, regional daily Westfalen-Blatt quoted a spokesman for the prosecutor's office as saying on Wednesday.
In a search of his flat in November investigators found photos of Germans carrying out training in Libya, but it was unclear whether they were still serving in the army or police at the time, or if they were retired, the spokesman told the paper.
Former chancellor Gerhard Schroeder has threatened to sue over media reports that he and Qaddafi discussed the training first during a secret meeting in Cairo in 2003 and again at an official summit the following year.
A separate parliamentary commission was also scheduled to begin investigating the affair on Wednesday.
Interior Minister for the German state of North Rhine-Westphalia (NRW), Ingo Wolf, announced on Tuesday that the state will review the last few years of vacation records for all police special forces officers.
The scandal continues to grow and criticism is now being directed at German diplomats. According to a report in the news magazine Der Spiegel, the German embassy in Tripoli was aware of the program and were involved in detailed discussions with trainers.
Allegedly, former members of Germany's GSG-9, the country's elite anti-terror unit, founded a private security company that paid police and others on a freelance basis to do training for up €15,000 per trip. The policemen allegedly conducted the training without the knowledge of their superiors while on holiday or after taking unpaid leave.