The bill, which passed by a vote of 76-69, is expected to receive approval from the state Senate by the end of April. The legislation also has been supported by Democratic Gov. Howard Dean.
If it becomes law, Vermont will have gone further than any other state in recognizing couples of the same sex, the Associated Press reported.
"This certainly is groundbreaking," said Peg Byron, education director for Lambda Legal Defense and Education Fund, a gay advocacy group. "I think it really sets a moral as well as a legislative example for the rest of the country."
State lawmakers adopted an amendment making it clear the term "marriage" continues to refer solely to the union of a man and a woman.
Opponents to the bill consider it an assault on morality and traditional marriage.
"This bill is not about the civil rights of a minority," said Roman Catholic Bishop Kenneth Angell in a statement. "This bill is about a minority imposing their concept of morality upon the morality of the majority."
The legislation is being considered after the state Supreme Court ruled in December that it was unconstitutional to deny same-sex couples the benefits of marriage. That court let the Vermont Legislature determine whether gay marriages should be allowed or some kind of domestic partnership should be created.
Under the bill, partners could apply for a license from town clerks and have their civil unions "certified" by a judge, a justice of the peace or a member of the clergy.
Some 300 state benefits or privileges available to married couples also would become available to same-sex couples in areas such as medical decisions, property transfers, inheritance and taxes. Couples could file a joint state income tax return, but federal taxes--along with Social Security and immigration rights--would not be recognized by the federal government.