Turkey's parliament has lifted a ban on female students wearing headscarves at university, a landmark decision that some Turks fear will undermine the foundations of their secular state.

Prime Minister Tayyip Erdogan's ruling AK Party hailed parliament's move as a triumph for democracy and justice in Turkey, a European Union candidate country where two-thirds of women cover their heads.

"Our main aim is to end the discrimination experienced by a section of society just because of their personal beliefs," AK Party legislator Sadullah Ergin said, adding that 80 per cent of legislators had backed the reforms.

But underlining the powerful emotions the headscarf evokes, tens of thousands of people waving Turkish flags and chanting secularist slogans staged a protest rally against the changes just a few kilometres from the parliament in central Ankara.

"Turkey is secular and will remain secular," shouted the protesters in Ankara.

A majority of the demonstrators, who were waving the red and white star and crescent flag of Turkey and bearing portraits of modern Turkey's founder Mustafa Kemal Ataturk, were women, including some who wore headscarves.

Some were wearing headbands that read "We are following your oath" along with pictures of Ataturk.

President Abdullah Gul is expected to approve the reform soon. The government must also amend a law governing the state body for higher education before the changes can take effect.

Turkey's powerful secular establishment, which includes army generals, judges and university rectors, sees the headscarf as a symbol of radical Islam and believe it threatens the country's secular order.

Parliamentary speaker Koksal Toptan, the second ranking official in Turkey's state hierarchy after Gul, said he hoped Turks could move beyond the divisions sparked by the reform.

"I hope this will be for the best of Turkey and hope it is done in a spirit of tolerance and reconciliation," Toptan said after legislators backed the changes by 411 against 103. The main opposition CHP now plans to ask the Constitutional Court to block the reforms.