The project's concept was still being negotiated, and would be presented "before the end of this year," government spokesman Ulrich Wilhelm said.
Similar projects in recent years _ including a private German group's plan to build a Berlin memorial to the millions of Germans driven from Poland and other countries as borders shifted westward in 1945 _ has caused anger in those nations, which suffered under brutal Nazi occupation.
Chancellor Angela Merkel's conservatives had once backed the idea, but their coalition partners, the center-left Social Democrats, opposed it.
A compromise agreement in the parties' 2005 coalition accord stated that they "want, in the spirit of reconciliation, to set a visible example also in Berlin," in cooperation with eastern European countries, "to remember the wrong of expulsions and proscribe expulsion for ever." It left open what that would entail.
The Sueddeutsche Zeitung daily said the new center would be set up as part of the German Historical Museum in Berlin.
The museum's general director, Hans Ottomeyer, said the center would not be limited to information on the expelled Germans, but on the European region as a whole.
"Our aim is to create an exhibition in the context of European history, to open the focus wide and not to show a view that is narrowed to the fate of the Germans," Ottomeyer said.
Merkel said this week that commemorating the fate of displaced Germans was "part of our German identity," and stressed that the planned center would not attempt to rewrite history.