The Brazilian Senate has approved controversial legislation that reforms rules on the amount of land farmers must preserve as forest.
The bill, which now returns to the lower house, also eases fines for some previous illegal clearance if farmers commit to a reforestation programme.
Supporters say Brazil needs land for food production, but environmentalists warn of increased Amazon destruction.
Latest figures show tree clearance at its lowest since 1988, officials say.
After several hours of debate, Brazilian senators voted by 59 to seven to approve the legislation.
It now goes back to the Chamber of Deputies, which in May voted to overhaul the Forest Code.
Further amendments are expected before going to President Dilma Rousseff to sign into law.
The bill poses a political dilemma for President Rousseff, correspondents say, as she aims to both support economic development but also uphold environmental pledges made during her election campaign.
Brazil is a major food producer and the farmers' lobby argues environmental protection unnecessarily harms their sector.
"This is the first time we're ending the monopoly, that we're ending the environmental dictatorship where half a dozen [non-governmental organisations] controlled the environment ministry," said Sen Katia Abreu, president of Brazil's National Agriculture and Livestock Association (CNA).
In a statement, the CNA said that new legislation would allow Brazil to "respond to the world's growing demand for food, as it continues to be a leading example in the preservation of its forests and biodiversity".
But Greenpeace Amazon spokesman Marcio Astrini told the Associated Press news agency that the new code would reduce the area required for conservation, so allowing new deforestation.
"It's based on the concept that the forest gets in the way, on the argument that developed countries cut their forests, so we need to do the same. That thinking is centuries old now," he said.
Under the Forest Code, which dates back to 1965, landowners must conserve a percentage of their terrain forested, ranging from 20% in some regions to 80% in the Amazon.
Under the Senate bill:
- farmers can count forest alongside rivers and lakes on their land as part of their conserved area, so reducing the total amount of land they need to protect or reforest
- agriculture allowed closer to environmentally fragile areas
- fines suspended for land cleared illegally before 2008 if farmers sign up to replant trees over the next 20 years.
On Monday, the National Institute for Space Research (Inpe) said there had been an 11% drop in the amount of rainforest cleared between August 2010 and July 2011 compared with the previous year.
The government attributed the fall to its tougher stance on illegal logging.
But in at least two states, Rondonia and Mato Grosso, rainforest clearance rose considerably.