Job sharing, family leave and video-conferencing could make it easier for people to serve as councillors.
The Welsh Government says a new law will ensure local authorities better reflect their communities with a wider range of views and experiences.
Greater transparency, including more webcasting of meetings, and a crackdown on bad conduct will also be promoted.
Local Government Minister Julie James said it would help "deliver better public services for everyone".
Reform of local councils has been on Welsh Labour's agenda for many years, with a lack of diversity of membership a major concern.
The Local Government and Elections (Wales) Bill outlines a number of reforms to encourage more people to stand for election or get involved in the work of local councils.
The measures include:
- Job sharing allowed for cabinet posts, including the council leader
- Allow foreign nationals legally resident in Wales to stand for election
- Lifting the ban on council employees standing for election to their own local authority
- Councils to publish guides on their work written in "ordinary language"
- Introducing a petition scheme, including e-petitions
Ms James said: "We want to enable a local democracy which reflects our diversity as a nation.
"This bill will help encourage far more people in Wales to stand to be councillors, and ensure people from all backgrounds are able to take up leadership and executive roles.
"The bill also takes steps to encouraging a more diverse range of members of the public to engage with local democracy.
"This will help ensure local government in Wales delivers better public services for everyone, helping people who need support, when and where they need it most."
Ideas previously raised such as term limits for councillors have been shelved following accusations of ageism.
The bill will be debated by the Welsh assembly in the new year.