Under the proposed law tobacco companies will be required to carry the pictures along with health warnings, Jessica De Leon, the department's health, education and promotion adviser, told AFP.
De Leon said similar pictures were already being carried on cigarette packs in Australia, Canada, India and Thailand and had proved to be an effective deterrent to smoking.
Such pictures would discourage people from smoking, especially the youth and women, who the tobacco companies are targeting with more attractive packaging which makes tobacco products look like sweets, she said.
It is not clear how long it will take for the legislation to be passed, however as it is not a partisan bill it is unlikely to be delayed by political disagreements.
The Philippines is part of a World Health Organisation accord requiring signatories impose tighter controls on tobacco marketing by September 2008, De Leon added.
A ban on billboard advertising for tobacco products came into force earlier this year in the Philippines.
Government data shows smoking is linked to five of the top 10 primary causes of death in the Philippines, with up to 35 percent of the population considered smokers.
Forty percent of Filipino smokers are adult men while 15 percent are children aged between 13 and 15, the health department said.
Every year, 75,000 Filipinos die of tobacco-related diseases.