According to records on the Parliamentary Monitoring Group website, the bill is expected to be submitted to Parliament this year and it is hoped that it will have a "positive impact on victims of crime, particularly foreigners who have been subject to xenophobic attacks".
Department of justice spokesperson Tlali Tlali said the proposed law will bring South Africa in line with its obligations to the United Nation's International Convention on the Elimination of all Forms of Racial Discrimination.
"This bill will create offences relating to racial discrimination, xenophobia, hate speech and other related acts of intolerance," he told News24.
Tlali said the proposed bill would strengthen existing laws and processes in dealing with crimes of discrimination.
"Should the need arise, more prosecutors will receive training on how to effectively use this legislation in order to ensure that the most severe of penalties permissible under the law are imposed by our courts when cases of this nature are heard," he said.
Tlali said although there were currently no specific hate crimes laws in South Africa there were "various provisions in terms of both the Constitution and the law of general application that can be used to charge a person who commits hate crimes".
These include Section 9 of the Constitution which guarantees the right to equality and prohibits unfair discrimination and Section 10 which guarantees and protects the right to dignity.
"Violation of the right to dignity may lead to prosecution under a common law crime of crimen injuria," he said.
He said other provisions that help guard against hate crimes such as xenophobia are the limitations on freedom of expression as set out in Section 16(2) and Section 10 and 11 which prohibit hate speech and harassment respectively.
He said the Constitution also made provision for equality courts to impose orders including settlement between parties.
The Consortium for Refugees and Migrants in South Africa (Cormsa), which along with other minority rights groups, has been lobbying for the introduction of hate crimes law in the country, said it welcomed the department's initiative.
"Once the legislation comes into force this will result in greater protection for foreign migrants and marginalised groups," Kaajal Ramjathan-Keogh, chairperson of Cormsa, told News24.
Ramjathan-Keogh said the department was yet to publish a draft form of the legislation so the group was unable to comment or make submissions on it.
She said she encouraged the justice department to facilitate the fast tracking of the draft bill "to come into force while ensuring that the relevant organisations are consulted on the content".
"We have legislation, (for example) counter-trafficking legislation, which has taken years to develop (at least five) and there is still no finality on when these will come into force."