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In his response to the question, Sheikh `Atiyyah Saqr, former head of Al-Azhar Fatwa Committee, states,
Indeed, covering the `Awrah (parts of the body which should be covered) for both men and women during prayer is not meant to ward off temptations because one may perform prayer alone without being seen by others. What is really meant by that injunction is to show politeness while standing in the presence of Allah Almighty, and to obey His order represented in the following verse: “ O Children of Adam! Look to your adornment at every place of worship…” (Al-A`raf: 31)
Imam Malik states that if one performs prayer while wearing tight clothes he should repeat that prayer in a non-tight cloth (i.e. a loose one).
Shedding more light on the issue of the proper way to cover the `Awrah during prayer, the late Sheikh Sayed Sabiq (may Allah bless his soul) states the following in his well-known book, Fiqh As-Sunnah:
It is related from Umm Salamah that she asked the Prophet (peace and blessings be upon him): ‘Can a woman pray in a long shirt (like a night shirt) and head-covering without a loincloth?’ He said: ‘If the shirt is long and flowing and covers the top of her feet.’” (Reported by Abu Dawud)
Thus, the clothes worn should properly cover the `Awrah. So if clothes are too tight-fitting, then they are not suitable for prayer.
The clothes worn must cover the `Awrah, even if they are tight enough to highlight those features. If the clothes are so thin that one's skin color can be seen, they are not suitable for prayer.