Steinmeier said all sides agreed that pro-Russian fighters and Kyiv`s forces should pull back heavy weaponry 15 kilometers from a demarcation line spelled out in a cease-fire deal agreed in Minsk in September.
Steinmeier said the agreement represented progress, but "no breakthrough" in efforts to achieve a peace accord for eastern Ukraine, where pro-Russian separatists have battled Ukrainian troops for nine months.
Steinmeier said the "contact group" -- representatives of Ukraine, Russia, and the OSCE -- would be meeting in the coming days to work out the details and timeline for the weapons pullback.
It was not immediately clear whether representatives of the rebels who hold parts of the Luhansk and Donetsk regions would attend the meetings.
In a joint statement released by the German foreign ministry, the ministers noted "with serious concern" that fighting in eastern Ukraine had severely escalated, causing the loss of many human lives including civilians.
The Berlin talks came amid reports that pro-Russian separatists have deployed more weapons and fighters to an emerging flashpoint in eastern Ukraine.
Ukraine says Moscow-backed rebels have overstepped agreed-upon front-line boundaries between the warring sides by 500 square kilometers.
Addressing the World Economic Forum in Davos, Ukrainian President Petro Poroshenko said 9,000 Russian regular troops were occupying 7 percent of Ukrainian territory.
Meanwhile, U.S. Ambassador to the UN Samantha Power said Russian President Vladimir Putin`s new peace plan for eastern Ukraine is little more than a blueprint for military occupation.
Speaking to the UN Security Council on January 21, Power said "the plan would seek to legitimize territorial gains" made by Moscow-backed rebels.
"Let us pull the veil away from Putin`s peace plan and call it for what it is -- a Russian occupation plan," she said during a special meeting of the 15-member body on Ukraine.
Putin`s spokesman said the proposal called for a cease-fire by government forces and rebels in southeastern Ukraine, and the withdrawal of heavy artillery by both sides.
Power said it was "a plan that would free Russia from the commitment it made in Minsk to withdraw its fighters and return control over the international border to Ukraine."
"Time and again President Putin has extended an olive branch in one hand while passing out Grad (Hail) missiles and tanks with the other," Power said.
Moscow said on January 18 that Poroshenko had rejected Putin`s proposal.
Power said "the current situation is dangerous" and urged Russia to implement the Minsk agreement.
Lithuanian Ambassador Raimonda Murmokaite said "Russia`s intentions to rewrite the Minsk agreements in a way that would legitimize and accept the territorial gains achieved by the militants speaks to Kremlin`s wholehearted support for those criminals."
Russian envoy Vitaly Churkin said Moscow was abiding by the agreement and blamed Kyiv for the fresh violence.
British UN Ambassador Mark Lyall Grant also criticized Moscow, citing "the usual pattern of Russian denials and misinformation."
He also called on Moscow to stop using humanitarian convoys to supply rebels with arms.
On the ground, the Associated Press news agency reported that pro-Russian rebels were advancing in an area northwest of Luhansk, the second-largest rebel-held city.
The fighting is reported to be centered on two checkpoints along a key highway.
Ukraine`s Defense Ministry said one of those positions -- Checkpoint 31 -- had been abandoned but that operations were under way to recapture it.
An AP reporter saw nine Gvozdika self-propelled howitzers and six antitank cannons moving near the town of Perevalsk on January 21.
A rebel militiaman with the convoy said the armament was heading in the direction of Checkpoint 31.
Along the same road, AP saw four Grad multiple rocket launchers accompanied by four trucks carrying ammunition and 15 tanks, also heading toward the checkpoint.
There were also signs the rebels were advancing elsewhere.
U.S. Secretary of State John Kerry said Washington was concerned that the separatists were attacking the town of Debaltseve, about 70 kilometers east of Donetsk.
Kerry called it a "very blatant land grab."
Speaking during a visit to Kyiv, U.S. Army Europe commander, Lt. Gen Ben Hodges, said the quantity of Russian military hardware being supplied to separatists had doubled between the Minsk agreement in September and December.
"It is irrefutable that they are getting direct support from Russia," Hodges said, citing the scale and sophistication of the weapons now in the hands of the rebels.
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