A University of Dusseldorf faculty board voted unanimously last week for a full inquiry into Education Minister Annette Schavan after a smaller panel recommended taking away her PhD in education because it said parts of the thesis had been copied.
Ms Schavan, 57, told the newspaper Die Welt she had written her thesis with a clear conscience in 1980. "That's why I strongly reject these accusations," she added. "I want to stay on as a minister beyond next year's election."
The accusations are similar to those that last year brought down Merkel's defence minister and heir-apparent, Karl-Theodor zu Guttenberg, but could prove more damaging for the government only nine months before an election.
As Schavan is education minister the case is a direct threat to her credibility, and opposition leaders have called on her to resign.
Merkel has said Schavan has her confidence but yesterday a coalition ally, Martin Neumann of the Free Democrats (FDP), also urged Schavan to consider stepping down.
The allegations of plagiarism have dogged her since May and she asked the university to examine them.