The Standing Committee for Academic Research and Issuing Fatwas issued a statement on this matter, which reads as follows: 

Praise be to Allaah, the Lord of the Worlds, and blessings and peace be upon our Prophet Muhammad, and upon all his family and companions.

The believing women at the beginning of Islam were extremely pure, chaste, and modest, which was the blessing of belief in Allaah and His Messenger and following the Qur’aan and Sunnah. Women at that time used to wear concealing garments, and it is not known that they used to uncover themselves when they met one another or when they met their mahrams. The women of this ummah followed this mode of behaviour – praise be to Allaah – generation after generation until recently, when corruption and impropriety entered the way women dress and behave for many reasons, which we do not have room to discuss here.

Because of the large number of questions that have been sent to the Standing Committee for Academic Research and Issuing Fatwas about women looking at women, and what women should wear, the Committee is telling all Muslim women that women are obliged to have an attitude of modesty, which the Prophet (peace and blessings of Allaah be upon him) described as being part of faith and one of the branches of faith. One aspect of the modesty which is enjoined by Islam and by custom is that women should cover themselves, be modest and adopt an attitude and conduct that will keep her far away from falling into fitnah (temptation) and doubtful situations.

The Qur’aan clearly indicates that a woman should not show to other women anything other than that which she shows to her mahrams, that which she customarily uncovers in her own home and when doing housework, as Allaah says (interpretation of the meaning):

“…and not to reveal their adornment except to their husbands, or their fathers, or their husband’s fathers, or their sons, or their husband’s sons, or their brothers or their brother’s sons, or their sister’s sons, or their (Muslim) women (i.e. their sisters in Islam)…”

[al-Noor 24:31]

If this is the text of the Qur’aan and this is what is indicated by the Sunnah, then this is what the wives of the Prophet (peace and blessings of Allaah be upon him) and the womenfolk of the Sahaabah used to do, and the women of the ummah who followed them in truth until the present day. What was usually uncovered in front of the people mentioned in this verse is what women usually uncover when they are at home and when doing housework, which is difficult to avoid, such as uncovering the head, hands, neck and feet.

With regard to going to extremes in uncovering, there is no evidence in the Qur’aan and Sunnah that this is permissible. This is also the way that leads to a woman tempting or being tempted by other women, which happens among them. It also sets a bad example to other women, as well as being an imitation of kaafir women, prostitutes and immoral women in the way they dress. It was proven that the Prophet (peace and blessings of Allaah be upon him) said: “Whoever imitates a people is one of them.” Narrated by Imam Ahmad and Abu Dawood. In Saheeh Muslim (2077) it is narrated from ‘Abd-Allaah ibn ‘Amr that the Prophet (peace and blessings of Allaah be upon him) saw him wearing two garments dyed with safflower, and he said, “These are from the clothing of the kuffaar – do not wear them.”

It is also narrated in Saheeh Muslim (2128) that the Prophet (peace and blessings of Allaah be upon him) said: “There are two types of the people of Hell whom I have not seen: people with whips like the tails of cattle, with which they beat the people, and women who are clothed yet naked, misguided and leading others astray, with their heads like the humps of camels, leaning to one side. They will not enter Paradise or even smell its fragrance, although its fragrance may be detected from such and such a distance.”

The meaning of the phrase “clothed yet naked” is that the woman is wearing clothes that do not cover her, so she is clothed, but in fact she is naked, such as when she wears a thin dress that shows the colour of her skin, or a dress that shows the outline of her body, or a short dress that does not cover part of her limbs.

So what Muslim women have to do is to adhere to the guidance followed by the Mothers of the Believers (the Prophet’s wives) and the womenfolk of the Sahaabah (may Allaah be pleased with them), and the women of this ummah who followed them in truth, and strive to cover themselves and be modest. This is farthest removed from the causes of fitnah and will protect them from the things that lead to provocation of desires and falling into immorality.

Muslim women must also beware of falling into that which Allaah and His Messenger have forbidden of imitating kaafir women and prostitutes, in obedience to Allaah and His Messenger, and in the hope of attaining the reward of Allaah, and for fear of His punishment.

Every Muslim must also fear Allaah with regard to the women who are under his care, and not let them wear things that Allaah and His Messenger have forbidden, such as provocative clothes, or clothes that are revealing or tempting. He should remember that he is a shepherd and will be responsible for his flock on the Day of Resurrection.

We ask Allaah to set the Muslims’ affairs straight, and to guide us all to the straight path, for He is All-Hearing, Ever-Near and Ever Responsive. May Allaah send blessings and peace upon our Prophet Muhammad and upon his family and companions.

Fataawa al-Lajnah al-Daa’imah, 17/290 

It also says in Fataawa al-Lajnah al-Daa’imah (17/297): 

What a woman is permitted to uncover in front of her children is that which is customarily uncovered, such as the face, hands, forearms, feet and so on.

And Allaah knows best.