The move will bring a sigh of relief from Indonesia's lucrative tourism industry, which has expressed concern over a new anti-pornography bill being pushed by conservative Muslim parties.
"Tourists will be able to wear bikinis in special tourist areas, such as in Bali, so Indonesia's tourism industry won't be hurt by this legislation," Democrat Party lawmaker Husein Abdul Azis told AFP.
"We are listening to the protests of stakeholders and people at large," he added, referring to fears the tourism industry would suffer if bikinis were criminalised.
Indonesia has declared 2008 "Visit Indonesia Year" and hopes to attract seven million visitors, earning 6.7 billion dollars in foreign exchange revenues.
However, tourist arrival figures indicate the target is unlikely to be reached.
Politicians, artists, rights activists and tourism entrepreneurs on the mainly Hindu island of Bali, Indonesia's premier tourist destination, have vowed to launch a campaign of non-compliance if the pornography bill is passed.
But Azis, a member of the committee drafting the bill, said dramatic changes had been made to earlier versions in a bid to iron out problems.
Lawmakers said the bill could be passed by the end of the month.