Merkel pinned the medal to the chest of Master Sergeant Alexander Dietzen
Germany's Chancellor, Angela Merkel, has presented four soldiers with the country's new medal for bravery, the first to be awarded since World War II.
The Cross of Honour for Bravery features a golden cross with an eagle in the centre, held on a black, red and gold ribbon with oak leaves.
It is the Bundeswehr's first decoration for bravery since the Iron Cross was shunned due to its WWII association.
The soldiers are being honoured for their bravery in Afghanistan in 2008.
The four risked their lives to aid those wounded in a suicide attack near Kunduz that left two soldiers and five children dead, the defence ministry said in a statement on its website.
"Despite burning vehicles and exploding munitions, the soldiers attempted to rescue their comrades and Afghan civilians," it added.
The German army did not previously have a bravery medal
Germany has some 7,200 troops currently serving abroad, including 3,830 in Afghanistan as part of the International Security Assistance Force (Isaf).
Ulrich Kirsch, chairman of the Federal Armed Forces Federation, a union representing German soldiers, told ARD television that the medal was fitting recognition of the military's increasing role.
"The soldiers are so close to death and injury - that's not the situation in other jobs," he said. "We consider this honour absolutely appropriate."
Before the creation of the Cross of Honour for Bravery, the Bundeswehr's four existing decorations were given only for "loyal services and in appreciation of exemplary soldierly acquittal of duty".
The Iron Cross was established originally as a Prussian military honour by King Frederick Wilhelm III in 1813.
The medal was later awarded as a top honour to German servicemen during both world wars, but was abandoned in 1945.