The draft law says a differentiation must be made between Afghan Taliban, Pakistani Taliban, and Al-Qaeda fighters.
It also calls for an end to military operations by international forces unless they come under attack or if they have first consulted with the Afghan Army.
A U.S. military spokesman said he was aware of the vote in the Mesharno Jirga, or Council of Elders, but did not have an immediate response.
A spokeswoman for NATO's International Security Assistance Force also declined immediate comment.
The bill still needs to be passed by the lower house and signed by Afghan President Hamid Karzai before becoming law.
Military Action Alone 'Not Enough'
Violence has increased in Afghanistan; last year was the bloodiest since the Taliban regime was ousted in 2001.
Speaking in Pakistan, NATO Secretary-General Jaap de Hoop Scheffer said military action alone was not the solution, despite the presence of some 37,000 NATO-led forces in Afghanistan.
"It is my strong opinion that the final answer in Afghanistan will not be a military one and cannot be a military one," de Hoop Scheffer said after talks with Pakistani President Pervez Musharraf. "The final answer in Afghanistan is called reconstruction, development, and nation building."
(AP, AFP, BBC)