The Dutch parliament voted on Tuesday to ban niqabs in some public places.
The law, passed by the lower house but still requiring the senate's approval, bans veils and other items that hide the face such as ski masks and helmets, in places where identifying the wearer is considered essential, including government buildings, public transport, schools and hospitals.
Few women in the Netherlands wear niqab, but a ban has long been a demand of Geert Wilders' anti-Islam opposition Freedom Party, which is leading in polls ahead of elections in March.
Full and partial face veils such as burqas and niqabs divide opinion in Europe, setting religious freedom advocates against secularists and those who say that the garments are culturally alien or a symbol of the oppression of women.
France and Belgium have completely banned wearing niqabs in public and some other European countries have local or regional restrictions. Violating the Dutch law would incur a fine of €405.
"Everyone has the right to dress as he or she wishes," the government said in a statement announcing the law.
"That freedom is limited only where it is essential for people to see each other, for example to ensure good service or security."
Opponents of the law have accused centre-right Prime Minister Mark Rutte of pandering to the anti-Muslim vote in a bid not to be outflanked by Wilders.
Long seen as one of Europe's most tolerant countries, the Netherlands has seen racial tensions mount since the turn of the century, with the 2004 murder of controversial film-maker Theo van Gogh by an Islamist militant widely considered a turning point.