The term used would apply to the Muslim burka and niqab, which cover all or most of the face.
Austria is just the latest European country to move to ban the Islamic veil, as the continent grapples with questions over Muslim integration, amid concerns over an influx of predominantly Muslim migrants and the threat of Islamist terror.
The agreement read: "We believe in an open society that is also based on open communication".
The plan - which would ban the burqa, niqab and other face-covering veils - echoes calls that German Chancellor Angela Merkel made last month for a similar ban in Germany.
She compared the policy to U.S. President Donald Trump's recent executive order restricting travel to the U.S. from a number of Muslim countries, saying both measures were aimed at "excluding Muslims".
The coalition of Social Democrats and the centrist People's party, who agreed on the ban, are calling for police offers, judges, magistrates, and public prosecutors to participate in the ban as well by refraining from wearing head scarves.
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The ban is part of a package of changes hammered out by the ruling Social Democratic party (SPÖ) and the centre-right Austrian People's party (ÖVP) to avert the collapse of their coalition government, which would have triggered snap elections. "Full-body veils in public spaces stand against that and will therefore be prohibited".
It is now a draft law, but the ban is due to come into force before the next parliamentary vote in 2018.
Women in Austria will no longer be allowed to wear the full-face veil in public spaces, the country's ruling coalition has decided.
"This is state-run discrimination against Muslim women that violates the Constitution and anti-discrimination laws".
It's also being suggested that migrants will need to sign an "integration contract" and a "statement of values" upon arrival into the country with "those who are not prepared to accept Enlightenment values having to leave" their country 'and society'.
Various burqa bans have also been approved in Belgium, the Netherlands, Bulgaria and Switzerland.