The official, Johannes Caspar, said Monday that Facebook has agreed to inform its members that it had obtained email addresses from their accounts and to give them the option of forbidding their usage.
The Friend Finder feature allows Facebook to search potential users and register or even import their entire email address books without notifying them.
If the users opt out of appearing in Facebook's directory, the site agreed with Germany to encrypt their email addresses, so that they would not resurface later, Caspar said.
"We hope to carry out the deal fast and we will follow it closely," Caspar said.
He said he contacted Facebook after receiving letters from German Internet users worried after receiving invitations to join the social networking site, often accompanied by photographs of their friends.
Facebook is the second internet giant to make concessions in a country particularly sensitive to privacy concerns due to gross abuses under the Nazi and communist regimes.
Germany is the only country where inhabitants were given the choice of having their houses blurred before Google's "Street View" launch. Elsewhere, residents had to wait until photos went online to request their withdrawal.