Chancellor Angela Merkel's cabinet signed off on the measure, which still requires parliamentary approval, after a rash of sexual assaults in crowds on New Year's Eve in the western city of Cologne drew intense media coverage.
Justice Minister Heiko Maas called the draft law "an important step toward strengthening sexual self-determination", noting that there were "unacceptable gaps in protection" against sexual coercion and assault under German law.
"It is high time that changes," he said in a statement.
Currently, rape victims in Germany must not only demonstrate that they verbally declined sex but that they physically resisted against their assailant.
Maas said the new legislation would now cover "the actual situations in which most attacks occur".
These include cases in which the victim was taken by surprise, intimidated or was threatened with other violence, for example in an abusive relationship.
Hundreds of women reported sexual attacks and robberies in Cologne on New Year's Eve in attacks blamed on Arab and North African men.
The city's police chief conceded that most perpetrators may never be caught over the spate of assaults, which ranged from groping to rapes, that inflamed public debate about a record influx of refugees and migrants.
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