The draft law guarantees freedom of expression as long as religion is not insulted or national unity threatened. The information minister, asked whether offenders could be jailed, said judges would decide.
"This is left to the judiciary and is not the affair of the information ministry," Minister Jehad Bukamal said at a news conference to announce the new bill.
Bahrain is ruled by a Sunni royal family but a majority of the population are Shi’ites, who complain of discrimination in jobs and services. There has been tension in the past, and many writers exercise self-censorship when dealing with sensitive issues.
No journalist has been imprisoned in Bahrain since 1999, the rights group Reporters Without Borders said in a March report on the country, which was placed 118 out of 169 in its 2007 press freedom index, behind Qatar, Kuwait and the United Arab Emirates. The United States was at number 48.
Kuwait is the only other Gulf Arab state that has decriminalised press offences, the organisation said.
"We’re happy that Bahrain has decriminalised press offences, but journalists can still be prosecuted under the penal code, for insulting the king or religion for example," Reporters Without Borders’ Middle East chief Hajar Smouni told Reuters.
Some 15 cases have been raised against reporters this year and 47 last year, but most were brought by private individuals.
It is not clear how the draft law will affect bloggers, and a Bahraini official said blogging would be dealt with in later legislation.
"There are so many clauses, such as not interfering with religion or the royals, that it empties the law of impact. If you transgress, what happens then?" said popular blogger Mahmood al-Yousif, who was sued for libel by a cabinet minister in 2007.
Smouni said a Reporters Without Borders delegation to Bahrain in February had recommended that judges be given special training in press affairs.
"Bahrain was very open to the idea and we even met with the general prosecutor. Officials said they were trying to set up workshops for judges," Smouni said.
It was not clear when the new draft press law would be presented to parliament for approval.
Bahraini journalists said Islamist lawmakers, who have dominated parliament since 2006 polls, might object to the law, particularly in relation to insulting Islam.
But Bahraini officials said they were confident the law would be passed soon because King Hamad bin Isa al-Khalifa has backed press law reform.
