The move is part of democratic reforms in the ex-Soviet republic announced by President Gurbanguly Berdymukhamedov, who has been president of Turkmenistan since the death of Saparmurat Niyazov, or Turkmenbashi, in 2006.
The new constitution proposed by Berdymukhamedov states that the powers of the People's Council, or the Halk Maslahaty, will be distributed between the president and parliament.
Set up in the early 1990s as a 'council of elders,' the Halk Maslahaty was turned into the country's highest legislative body in 2003 when Niyazov delegated some of parliament's main powers to it.
The decision was believed to have been a reward for loyalty shown by the Halk Maslahaty after an assassination attempt on Niyazov in late 2002. The Halk Maslahaty then approved a law on terrorism and stipulated life in prison as punishment for coup attempts.
The People's Council's 2,507 members gathered once a year, mainly to rubber-stamp decisions of parliament, which themselves were usually proposed by Niyazov. Some Halk Maslahaty members were elected, some were appointed, and some chosen because of their region, ethnic group, or clan.
The Halk Maslahaty's most memorable decision came in 1999, when it confirmed a proposal by parliament to make Niyazov "president for life."
Turkmenistan's new leader said last month he would invite international observers to monitor parliamentary polls on December 14. He has also made other moves to introduce more democracy to the energy-rich country and end the cult of personality that had grown up around Niyazov.
Berdymukhamedov earlier restored the names of the months in the Turkmen calendar, two of which had been renamed after Niyazov and his mother.
"Names of months and days have to comply with international standards," Berdymukhamedov was quoted by state media as saying in April.
However, opposition groups abroad have questioned the reforms, saying media restrictions are still in place in the country, and that the legislature is dominated by the pro-presidential Democratic Party.
At the last People's Council session on Friday, Berdymukhamedov signed a decree releasing more than 1,600 prison inmates under an amnesty to mark the Day of Power, the day during Ramadan when Allah is believed to have revealed the Koran to the Prophet Muhammad. The tradition was established by Niyazov.
Niyazov's book, a "spiritual guide" called the Rukhnama, was compulsory reading for students and workers in the Central Asian state during his reign.