Prime Minister Scott Morrison says he wants religious discrimination laws to unite Australians, not be divisive.
Cabinet ministers approved the proposed legislation at a meeting in Canberra on Tuesday night, and the bill will be taken to the coalition partyroom when parliament returns next month.
"This is an issue that I think should be bringing Australians together, not one that does the opposite, and I look forward to completing that process," Mr Morrison told reporters on Wednesday.
He said there was still "a way to go" in finalising the wording of the laws, which are expected to be released in draft form within the next two weeks.
"This is just a first step, this is just another stage in the process," he said.
"We will have an exposure draft piece of legislation, which is intended to take us into the next round of discussions."
Some faith groups, whose leaders met with Mr Morrison earlier this month, are looking for further legislative changes.
Mr Morrison said he would continue to consult with religious groups and others to progress the legislation.
The laws could be passed by the end of the year, but they won't deal with the issue of how schools deal with gay staff and students.
The Australian Law Reform Commission is separately looking at religious exemptions to discrimination laws, with a report due in early 2020.
It wants to protect the right of religious institutions to conduct their affairs in a way consistent with their religious ethos.
Attorney-General Christian Porter says the laws will protect people from being discriminated against, but will not give them a licence to discriminate against other people,.
It will be similar to other existing anti-discrimination laws, such as those covering age, race and disability.
Labor says it will support modest changes to anti-discrimination laws to protect people of faith, but not broad-ranging reforms.
Australian Associated Press