The ban, imposed on 4 January, was resisted by opposition groups.
It was lifted because it made women "unhappy", his office said in a statement, adding that they were his "best friends".
Last month, the president declared the Muslim-majority country an Islamic republic.
He said the move was in line with the nation's "religious identity and values".
d in the pro-opposition Freedom and JollofNews newspapers, dated 4 January, said that an "executive directive has been issued that all female staff within the government ministries, departments and agencies are no longer allowed to expose their hair during official working hours".
But on Thursday, Mr Jammeh's office said that the government's initial ban had had "nothing to do with religion" and that women should not be upset by it.
"Women are (Mr Jammeh's) best friends, they are his sisters and he is here for their wellbeing and happiness at all times," a statement said.
"That being the case, this decision that makes them unhappy has been lifted."
The Gambia is popular with Western tourists because of its beaches. About 90% of Gambians are Muslim - and many Muslim scholars believe that Islam orders women to cover their hair in public.
Rights activists accuse Mr Jammeh - who has been in power since 1994 - of presiding over a brutal regime which is intolerant of dissent.
He portrays himself as a devout Muslim with miraculous powers - once claiming that he could cure Aids with a herbal concoction.
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