A proposed overhaul of the 1969 Crimes Act excludes sections that ban homosexuality.
Currently, the law bans "indecent acts" between two men, and "consensual sodomy" with prison terms of between five and seven years, although convictions are rare.
LGBT activists in the country have long been pushing for an amendment, and the draft Crimes Bill 2017 brings that one step closer.
The Solicitor General, David James, says the new bill makes laws suitable for the modern era, and means people will no longer be locked up for their private conduct.
However, it will not legalise same-sex marriage.
The bill will soon be open for public submissions, and will go back to parliament later this year.
Photo: 123rf Gay Pride