A committee at the German parliament (in background) is investigating US spying allegationsThe German government has ordered the expulsion of a CIA official in Berlin in response to two cases of alleged spying by the US, bbc reports.
The official is said to have acted as a CIA contact at the US embassy, reports say, in a scandal that has infuriated German politicians.
A 31-year-old German intelligence official was arrested last week on suspicion of spying.
Reports on Wednesday said an inquiry had also begun into a German soldier.
"The representative of the US intelligence services at the embassy of the United States of America has been told to leave Germany," government spokesman Steffen Seibert said.
The chairman of the Bundestag (parliament) committee overseeing the German secret service said the action was taken because of American spying on German politicians and its failure to co-operate and provide adequate responses.
The US has not denied allegations that a German intelligence agency employee arrested last week was passing secret documents to the US National Security Agency (NSA).
However, the latest reports that a soldier within the defence ministry was also spying for the US were considered more serious. Although no arrest was made, searches were carried out on Wednesday at the ministry and elsewhere.
The US and Germany have been close allies for decades but relations were hit last year when it emerged that Chancellor Angela Merkel's mobile phone had been monitored by the NSA.
A White House official approached by the BBC declined to comment on the matter but said that the security and intelligence relationship with Germany was important to both countries.
"It is essential that co-operation continue in all areas and we will continue to be in touch with the German government in appropriate channels," the official added.