The committee, made up of state secretaries from Germany's 16 Bundesländer, will attempt to smooth over an early spat within Germany's fledgling coalition government over immigration and look at ways of stopping migrants from abusing welfare payments.
The Bavarian-based Christian Social Union (CSU), sister party to Merkel's CDU, argues unskilled immigrants from eastern Europe are coming to Germany to exploit the social security system.
The party's comments came just days ahead of the January 1st lifting of restrictions on work permits for immigrants from Bulgaria and Romania in the rest of the EU.
The claim unleashed a heated debate with new coalition partners the Social Democrats (SPD), which accused the CSU of populism.
Widely seen as a bid to appease the CSU and their supporters, the new committee will look into how the government could stop poorer immigrants from other EU countries from exploiting Germany's generous benefits.
Experts say the CSU's fears are unjustified, pointing to statistics showing Bulgarian and Romanian immigrants make up just a fraction of those drawing German Hartz IV unemployment benefits.
In summer last year, just 0.6 percent of those living on Hartz IV payments were immigrants from Bulgaria and Romania, according to figures released this week by the Institute for Employment Research.
Although immigrants from those countries typically held fewer qualifications, figures showed the unemployment rate among this group was not only below the national average, but far below that of other migrant groups.
However, a recent Forsa opinion poll suggests 60 percent of Germans believe fears that immigrants will exploit the system is justified, as opposed to 36 percent who think the concerns are overblown.
Germany saw a boost to its population last year due to the biggest influx of immigrants in two decades, mainly from Europe's crisis-hit countries, according to official estimates published on Wednesday.
The figures released by the federal statistics office Destatis showed that the number of people living in Germany had surged to 80.8 million in 2013 from 80.5 million - the third annual increase in a row.
"Once again, the high level of positive net immigration offset a lack of births," Destatis said in a statement.