The country registers dire air pollution levels every year, with Bangkok and the northern city of Chiang Mai ranked among the most polluted cities in the world on some days last year.
Industrial emissions, vehicle exhaust fumes and smoke from stubble burning by farmers from December to April send air quality plummeting annually.
Environmentalists have long called for legislation to tackle air pollution, which last year saw two million people seek medical treatment, according to the health ministry.
"The cabinet has approved a Clean Air Act," Prime Minister Srettha Thavisin told reporters on Tuesday.
He said the draft had "gone through debates from the citizens and relevant agencies".
Parliament is expected to debate the bill from January 11, local news outlets said, though it must clear several more hurdles to become law.
The announcement came as the Thai Geo-Informatics and Space Technology Development Agency, which monitors pollution levels, said 21 provinces were enduring high levels of PM2.5 particles, so small they can enter the bloodstream.
After Srettha's government took office last year, he vowed to tackle the issue.
He is set to travel to Chiang Mai later this week to discuss the problem.
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