The main points, which have been sent to regional authorities and concerned groups for discussion, allow circumcision with certain provisos including that it be carried out with the "most effective pain relief possible," a Justice Ministry spokesman said on Tuesday.
Parents must be fully informed beforehand about the procedure, which may not be carried out in cases where a child's well-being is at risk. An example would be if a child were a haemophiliac.
The outline also states that, as a rule, circumcisions are to be conducted by doctors but can also be done on a baby up to six months old by someone chosen by their religious community.
That person must be as skilled at circumcision as a doctor, it says.
"Circumcision remains permitted in Germany," the spokesman said, referring to the outlines for the new law.
"The regulation is to remove the uncertainty after the judgement of the Cologne court," he added.
The court's ruling published in June, that circumcision was tantamount to grievous bodily harm, united Jewish and Muslim groups in opposition and caused uproar from religious and political leaders in Israel and Muslim countries.
Diplomats have admitted that the ruling has proved "disastrous" for Germany's international image, particularly in light of its Nazi past, and the debate even prompted the former head of the Central Council of Jews in Germany, Charlotte Knobloch, to question whether the country still wanted a Jewish community.
About four million Muslims and more than 200,000 Jews live in Germany.
The Justice Ministry will hold a hearing with expert testimony on the issue on Friday, the Süddeutsche Zeitung newspaper said.