"The National Assembly approves women's participation in the Municipal Council elections," state news agency KUNA reported on Tuesday.
Kuwaiti women are not allowed to vote or run in parliamentary polls, but the government has introduced a bill to grant full female suffrage that has yet to be approved by the 50-man house.
Similar government moves have failed in the past in the pro-Western country, including a 1999 law narrowly defeated by an alliance of conservative Islamist and tribal MPs.
Kuwait was the first Gulf Arab state with an elected parliament, but women have been fighting for decades for the right to vote. They have had to watch as women in other Gulf states like Qatar and Bahrain won political rights.
Last month, Kuwaiti lawmakers passed a municipal elections law without a government-proposed article to let women participate, setting back hopes the house would approve broader female suffrage.
Hundreds of activists, mostly women, protested outside parliament on that day to demand equal rights for women as stipulated by Kuwait's constitution. The government later amended the law and sent it back to parliament.
"The amended draft stated ... that women will have the right to run, vote and be appointed as Municipal Council members"
On Tuesday, 26 MPs out of 49 in attendance backed the bill allowing women to take part in municipal polls. Twenty lawmakers were against while three abstained, KUNA said.
"The amended draft stated ... that women will have the right to run, vote and be appointed as Municipal Council members," it said. Six council members would be appointed by the state.
Some Islamist MPs have said they will back the right of women to vote but not to run in parliamentary polls. Other Islamists or tribal lawmakers oppose the bill altogether.
Kuwaiti women have traditionally been more liberal than their Gulf counterparts. They serve as diplomats, run businesses and have senior roles in the oil and banking sectors.
Kuwaiti officials have set progress on political and economic reforms as a priority for the oil-rich country.