The measure was drafted by the conservative-led government in the southwest state of Baden-Wuerttemberg on Tuesday following a landmark verdict by Germany's highest court in September.
It must be ratified by the state parliament, probably in January, but this is regarded as a formality because of the Christian Democratic Union (CDU) majority.
"The aim of the law is to forbid state teachers from wearing symbols which could be regarded as political," said state premier Erwin Teufel, a member of the CDU.
Regional Culture Minister Annette Schavan added the headscarf is "seen as a symbol of cultural division and part of a history of oppression of women."
A question of values
The German Muslim League, based in Hannover, has condemned the move as completely intolerant.
The league's chairwomen, Iyman Salwa al-Zayid, said many westerners found it impossible to believe that women would want to wear a hijab, even though more women are converting to Islam in Europe than men.
"What is genuinely sad is that should a women choose to wear a short skirt, an open top and reveal her stomach to the public – well that is just fine. If she chooses to be modest for God's sake, then this is deemed to be oppressive to women. It's crazy."
But Teufel and Schavan defended the decision not to include Christian or Jewish symbols in the ban, saying the state constitution placed Christian and Western values and culture at the heart of the education system.
In September's ruling, the federal constitutional court argued that it was wrong for Baden-Wuerttemberg to forbid a Muslim female teacher from wearing a headscarf in the classroom because there was no law against it.
However, the court said individual states could legislate to ban religious apparel in state schools if they were deemed to unduly influence children.
"What is genuinely sad is that should a woman choose to wear a short skirt, an open top and reveal her stomach to the public – well that is just fine. If she chooses to be modest for God's sake, then this is deemed to be oppressive to women. It's crazy"
chair of German Muslim League
German civil rights organisations representing the 3.2 million Muslims living in Germany have defended women's right to wear a headscarf.
The Central Council of Muslims said that if it was passed, the bill "would hinder integration" and result in a "wide-scale discrimination against Muslims, notably women".
Marieluise Beck, the German federal government's spokeswoman on integration, criticised the bill for differentiating between religious communities.
She added it would be interesting to see if nuns in religious schools would be asked to remove their headscarves.
Other states planning similar legislation to Baden-Wuerttemberg are Berlin, Bavaria, Brandenburg, Hesse, Lower Saxony and Saarland.
Of those, Berlin, Hesse and Saarland want to extend the prohibition to all public services.
Similar Turkish move
In a similar case on Tuesday, Turkey's top court lashed out at the Islamist-rooted government for meddling in judicial affairs in a blazing row over the expulsion of a veiled woman from a courtroom.
A judge at the court of appeals last week ordered a defendant out of the courtroom when she refused to take off her Islamic-style headscarf during a hearing into a corruption case.
The government of Prime Minister Recep Tayyip Erdogan, which has its roots in a banned Islamist movement, slammed the incident as a violation of the right to defence and judicial discrimination against women wearing the Islamic head cover.
The court of appeals hit back, charging that the criticism amounted to "interference in judicial affairs, which can never be accepted".
Veiled women are normally allowed to attend court hearings in Turkey.
But the appeals court defended its controversial decision, saying it was up to the judge to decide what garments constitute contempt of court.