Friday's announcement comes at a time when the debate on such veils and whether they prevent Muslims from integrating has gathered momentum across Europe and drawn comments from leaders such as Britain's Tony Blair and Italy's Romano Prodi.
Last December Dutch parliamentarians voted in favour of a proposal by far-right politician Geert Wilders to outlaw face-coverings, partly on security grounds, and asked Rita Verdonk, the Immigration Minister, to examine the feasibility of such a ban.
Verdonk said the fact veils were worn for religious reasons could bring new legislation into conflict with Dutch religious freedom laws, but signalled the government would try to find a way around this.
"The cabinet finds the wearing of a burqa undesirable ... but cannot at present enforce a total ban," she said after a cabinet meeting, according to Dutch news agency ANP.
Cabinet to discuss
Existing legislation already limits the wearing of burqas and other total coverings in public transport or schools, Verdonk said, but the cabinet would discuss imposing as wide a ban as possible next week.
"The government will search for the possibility to provide a ban," her spokeswoman told Reuters.
The Muslim community estimates that only about 50 women in the Netherlands wear the head-to-toe burqa or the niqab, a face veil that conceals everything but the eyes.
"The cabinet finds the wearing of a burqa undesirable ... but cannot at present enforce a total ban"
Dutch Immigration Minister
Dutch Muslim groups have complained a burqa ban would only make the country's one million Muslims feel more victimised and alienated, regardless of whether they approve of burqas or not.
The Netherlands would be the first European state to impose a countrywide ban on Islamic face coverings, though other countries have already outlawed them in specific places.
In 2004, France banned overt religious symbols such as Muslim headscarves, large Christian crosses and Jewish skullcaps from schools, arguing they were contrary to its separation of church and state.