The legislation, taking effect July 31 and proposed by the opposition party, is seen as a step toward increased democracy, the Iceland Review reported Wednesday.
"It is pleasing how fresh the breeze of equality is at Althingi [the Icelandic Parliament] these days," said Siv Fridleifsdotttir of the Progressive Party, the bill's first presenter.
Stripping in Iceland had generally been considered illegal before yesterday's legislation was passed, but a few clubs were given a legal exemption. Under the new law, those exemptions will be rescinded, the newspaper said.
Asgeir Davidsson, who runs the strip club Goldfinger, is investigating his chances of suing the Icelandic state for compensation.
"I have reached the age where I'm not sure whether I want to bother with this hassle anymore," he said. "I would be relieved if they just paid me compensation and I would quit."