The proposal would prevent the wearing of full-face veils by public servants.
The legislation, which still needs upper house approval before becoming legal, was passed by the German lower house of Parliament.
The law was proposed following December's Berlin terror attack and amid fears that wearing a burka and other face-covering items in courts, public schools, and elsewhere compromised the neutrality of public servants.
There were also concerns that it would restrict the identity of public servants being known.
German law states: "(the state) has a duty to present itself in an ideologically and religiously neutral manner." Consequently, all public servants, including military, judicial staff, and election officials, will have to comply with the prohibition if it's passed, AFP reported.
The proposal falls short of Chancellor Angela Merkel's call for a ban 'wherever legally possible".
It also falls short of the full ban imposed in France. The French issued a ban on face-covering veils in public and headscarves in school amid terror fears in the country, and in March, an European Union court ruled that Islamic headscarves could be banned by employers.
This week, Britain's UK Independence Party recently published a proposal to outlaw full-face veils such as burkas. The party also is looking to halt female genital mutilation.