The legislation has been held up for months because Senate Majority Leader Harry Reid (D-Nev.) and the White House object to a provision included by the Armed Services Committee on terrorist detainee policy.
But Levin said the Pentagon legislation should hit the floor "in the next few weeks," suggesting the impasse has nearly been smoothed out.
Administration officials and many congressional Democrats say new detainee language should allow some terrorism suspects to be transferred to U.S. soil and tried in federal courts.
Many Republicans support prohibiting the transfer of terrorism suspects from the Guantánamo Bay detention facility to the United States to be tried in the federal court system.
The Armed Services Committee, after closed-door debate this summer, agreed to detainee provisions that would allow for indefinite detention of suspects aligned with al Qaeda and similar groups. The detainee language would make it mandatory that terrorism suspects be held in military custody, while also setting restrictions on the transfer of detainees to the civilian court system.
For his part, Reid has promised to iron out the matter and finish the bill this year.