The German government has put plans on hold to upgrade German-made tanks used by Turkey amid a public outcry over a Turkish offensive in northern Syria.
Foreign Minister Sigmar Gabriel said the decision would be taken once a new coalition government had been formed.
Pictures have been circulating in the German media of Leopard tanks being used by Turkish forces in their campaign against Kurdish forces.
Turkish-led forces began their assault in Syria's north-west on Saturday.
Air strikes pummelled the Afrin enclave before ground forces moved in against the Kurdish YPG militia.
Forty-eight Turkish-backed rebels and 42 YPG fighters have been killed in the fighting since Saturday, says the Syrian Observatory for Human Rights, a UK-based monitoring group.
Germany was set to approve the upgrade - what happened?
Yes, last week Berlin seemed ready to approve Turkey's request for German arms manufacturer Rheinmetall to make its 1990s-era Leopard 2 tanks less vulnerable to explosives.
But then pictures emerged suggesting the tanks were not only being used in campaigns against the Islamic State (IS) group but also in Turkey's "Operation Olive Branch" against the YPG.
Politicians not only from the German left but also Chancellor Angela Merkel's own CDU party have condemned the upgrade. Norbert Röttgen, the conservative chair of the parliamentary foreign policy committee, told the BBC the Turkish attack was a violation of international law.
There is deep unease about the Turkish incursion into Syrian territory - and the impact of its campaign on civilians.
The Observatory reports 28 civilians killed by Turkish air and artillery strikes on Afrin and another two by YPG fire inside Syria. Thousands of people have been displaced.
What's the back story here?
Conflicting alliances and interests among regional and global powers.
Turkey accuses the YPG of having links to the banned Kurdistan Workers' Party (PKK) group within its own borders.
The YPG denies any direct organisational links to the PKK - an assertion backed by the US, which has provided the militia and allied Arab fighters with weapons and air support to help them battle IS jihadists in Syria.
The US-Turkish tensions are illustrated by reports of a confrontational phone call between Turkish President Recep Tayyip Erdogan and US President Donald Trump on Wednesday.
While a White House statement says Mr Trump "urged Turkey to de-escalate" its Afrin operation, the Turkish foreign minister says Mr Erdogan demanded US troops withdraw from northern Syria's Manbij region, which is also controlled by Kurdish forces.
Mr Erdogan has reportedly said the Turkish operation will be extended to Manbij - potentially bringing the Nato allies into direct conflict.
The White House statement says President Trump "urged Turkey to exercise caution and to avoid any actions that might risk conflict between Turkish and American forces".
Meanwhile, the Anha news agency is quoting the Kurdish-led administration of Afrin as saying that the Turkish operation "threatens Syria and the security and life of the civilian population residing in the area".
"The aim of this aggression is to cut more Syrian land by occupying Afrin," the statement says, urging Syria to "protect its borders with Turkey from attacks by the Turkish occupier".
So far the Turkish-backed forces seem to have made slow progress.
How has Turkey reacted to the news?
Foreign Minister Mevlut Cavusoglu told reporters the suspension did not amount to a complete block on defence co-operation between Turkey and Germany, one of the biggest arms exporters in the world.
"While we fight with terrorists, we expect support and solidarity from Germany," Mr Cavusoglu told reporters. "We expect them to not support terrorists, but I know they are also under pressure."
German media say the caretaker government was close to agreeing the modernisation deal with Turkey and was back-footed by the public outcry.
But the government now says it is unanimous that the decision should be taken when a new coalition government has been formed.
It is a setback for German-Turkish ties when a rapprochement had appeared to be on the horizon following a meeting between Mr Gabriel and Mr Cavusoglu earlier this month.
Relations hit rock bottom in the fallout of Turkey's crackdown in response to an attempted coup in July 2016. There has been particular anger over Ankara's detention of German-Turkish journalist Deniz Yucel in February 2017.