Dozens of politicians, actors and journalists this month have signed Schwarzer's appeal to Chancellor Angela Merkel and parliament to abolish sex work.
"We know there is slavery in the world today, but there is no modern democratic country that would tolerate, accept or promote slavery," she said at a recent Berlin press conference on her new book "Prostitution, A German Scandal".
"However, Germany tolerates, accepts and promotes prostitution, mostly at the expense of the poorest women from neighbouring countries."
She urged a review of the 2002 law -- passed under a centre-left Social Democrats-Greens coalition government -- that theoretically gave sex workers access to unemployment insurance, controlled working conditions and medical coverage.
The founder of the feminist magazine Emma argued that the law backfired and has turned Germany into a "paradise for pimps" who can now more easily exploit women, especially from poorer central European countries like Romania and Bulgaria.
Schwarzer, 70, said this "liberalisation of prostitution has been a disaster for the people involved," estimating the number of prostitutes working in Germany now at 700,000.
"These brothels are always in need of 'fresh meat', as they say, which means that the women generally work for a few weeks in these establishments and eventually end up on the street," Schwarzer said.
In a 2007 report -- with the official figures so far on the effects of the law -- the government conceded that the outcome had been disappointing and the legal change did not "actually improve the welfare of prostitutes".
The study found that only one percent of prostitutes had an employment contract.
Many social workers and police also report that the law only aggravated the situation.
"It is now indisputable that there is an urgent need to effectively respond to the phenomenon of trafficking in human beings, which is spreading," the police commissioner of the southern city of Augsburg, Helmut Sporer, told a parliamentary inquiry in June.
National police data shows that reported cases of human trafficking have been on the decline, from 811 in 2002 to 432 in 2011, the latest year for which figures are available.
However, Chantal Louis, editor of Emma magazine which published Schwarzer's appeal, said that "it is really very cynical to first pass a law making the investigation ... of trafficking particularly difficult, then to say that the number of cases is declining."
The renewed debate to curb prostitution has now made it onto the agenda of ongoing coalition talks between Merkel's conservative Christian Democrats and the Social Democrats.
"We are very, very proud," that the issue has grabbed top political attention, said Schwarzer.
The writer, who was involved in the French women's liberation movement while she was a Paris correspondent, also praised the current push there to stamp out prostitution, spearheaded by women's rights minister Najat Vallaud-Belkacem.
"It has encouraged us to see that in Europe, there are more and more countries that speak of prostitution in terms of human dignity and are beginning to act," she told AFP.
But, as in France, the campaign against prostitution has also sparked resistance in Germany.
During her Berlin presentation, Schwarzer was whistled at and booed by audience members who said they were sex workers.
Undine de Riviere, a prostitute and spokeswoman for a professional union of suppliers of sexual and erotic services, is part of the opposition.
"Feminists do not think we can speak for ourselves," she told the Munich daily Sueddeutsche Zeitung.
"The desire to control sexuality and prostitution has always been great and very difficult to get out of people's heads."
Schwarzer said that "of course we are not naive, we know prostitution won't be abolished tomorrow ... it is a social process of raising consciousness, of creating an awareness about the injustice."
"We want to, step by step, move toward the goal."