Parliament has agreed to gradually increase development aid from 0.37 per cent to 0.5 per cent of gross national product by 2015.
But it made the financial boost conditional on the government presenting a plan next year on how to finance the increase.
The Senate on Monday decided to limit multilateral development aid to 40 per cent - in line with a decision by the House of Representatives – and gave preference to bilateral aid.
Both parliamentary chambers approved a financial package worth SFr4.5 billion ($3.7 billion) for the Swiss Agency for Development and Cooperation (SDC) and a further SFr800 million for the State Secretariat for Economic Affairs (Seco) over the next four years.
The non-governmental Alliance Sud organisation said parliament's agreement was an important step in the right direction.
Development aid groups, churches, trade unions and environmental organisations had collected more than 200,000 signatures for a petition calling for the United Nations Millennium goal of aid to equal 0.7 per cent of GNP.