"Drugs were not only allegedly consumed but also sold by students" at the German Armed Forces University in the northern city of Hamburg, the ministry said in a statement without specifying which drugs were involved.

A campus search was carried out in mid-January and disciplinary measures have been taken in the investigation targeting officer cadets, said ministry spokesman Kenneth Harms.

He added that law enforcement authorities are also involved.

"To be perfectly clear, drug use and drug possession are incompatible with the values upheld in the German Armed Forces, and we maintain a strict zero-tolerance policy in this regard," he said.

The ministry said an investigation was also underway into "potentially humiliating initiation rituals" at the university.

The issue comes as the German armed forces steps up a recruitment drive, sending questionnaires to all young men turning 18.

The drive is part of Germany's broader effort to build up the military as Europe worries about Russia and the strength of US commitment to NATO.

The ministry is already investigating a scandal centred on sexual misconduct and right-wing extremism at an elite paratrooper regiment based in the southwestern town of Zweibruecken.