Lesley Griffiths, the Cabinet Secretary for Environmental Affairs said in a statement that the administration is working towards a scheme compatible with the one currently in force in England, which sees circuses with animals regularly inspected to ensure they meet the welfare needs of the animals in their care.
The proposed licence will apply to 'Mobile Animal Exhibits' including circuses.
The move is a step back from a ban on wild animals in the big top, which was mooted by the Welsh Assembly in 2015, and follows representations from members of the #circus industry, including Anthony Beckwith, a director of An Evening With Lions and Tigers, which toured Wales in 2015.
The Welsh plan also mirrors an apparent change of heart towards circus animals in Westminster - which stands just across the Thames from where the circus was invented by horse rider Philip Astley nearly 250 years ago.
Circuses in England
The Circus Licensing Scheme which currently applies in England was introduced in 2013, initially as a temporary measure ahead of a ban on wild animals in circuses which the government had announced in 2012 would come into force by December 2015.
No further moves were made to pass the proposed ban into law, however, and repeated attempts by Labour's Jim Fitzpatrick to introduce a ban via a private members bill were blocked by Conservative MPs.
In a debate on the issue in February 2016, Conservative MP Christopher Chopetold the Commons that the success of the licensing scheme had rendered a ban unnecessary.
"Nobody has criticised the welfare of the animals subject to that licensing regime," said Chope. "I think we have reached a compromise where we have a proper, tight licensing regime without the need for a total ban."
Opposition to the use of animals in entertainment has existed since the formation of the Performing Animals Defence League in 1914. The movement gained traction in the 1980s and 90s, and many circuses switched to an all-human line-up. But the Radford Report, sponsored by the government in 2007, found no welfare reasons for a ban on those shows that continued to tour with animals.
There are currently only two circuses licensed under the English scheme: Circus Mondao and Peter Jolly's Circus, which feature non-native animals including camels and snakes. Certain other circuses such as Zippos are exempt because they feature only domestic animals such as horses and dogs.
An Evening With Lions And Tigers, which stars Britain's last lion tamer Thomas Chipperfield is expected to return to the road this year. Chipperfield is currently appearing in Italy in a winter season with Circo de Vienna.
A public consultation on the Welsh licensing scheme is expected to be carried out this year.