Thailand was rocked by several surrogacy scandals earlier this year.
One involved an Australian couple who took home a healthy baby girl born from a Thai surrogate mother but left behind her twin brother who had Down’s syndrome.
The other case involved a Japanese man who fathered at least 16 babies through Thai surrogates.
National Legislative Assembly member Chet Siratharanon said the bill passed its first reading, and a finalised version is expected to be ready for consideration within 30 days.
The interim government installed after a military coup in May had vowed to outlaw commercial surrogacy and punish offenders with up to 10 years in prison.
Thailand is one of the few countries in Asia where commercial surrogacy is not specifically banned by law.
The Medical Council of Thailand has a regulation stating that doctors cannot perform surrogacy for pay or risk losing their licence, but that penalty has rarely been enforced and there are no rules covering surrogacy agencies or surrogate mothers, leaving room for commercial surrogacy to occur without oversight.
Thailand has become a go-to destination for couples from Australia, Hong Kong and Taiwan and a low-cost alternative to the United States.
The cost of a baby by surrogate in Thailand is less than 50,000 US dollars (£32,000), compared with about 150,000 dollars (£96,000) in the US.