A June regional court ruling prompted outrage in Germany's Jewish and Muslim communities by stating that circumcision can amount to criminal bodily harm.
The Justice Ministry said Wednesday that the draft rules were aimed at "removing the uncertainty" caused by the verdict.
The proposal submitted to lawmakers would allow properly trained religious practitioners to conduct circumcisions on boys up to six months old. Effective pain relief would need to be provided.
Germany's Central Council of Jews has said it plans to formalize the training of Jewish circumcision practitioners, known as mohalim.