Yemen is to become a federation of six regions as part of its political transition, state media report.
Final approval was given by a committee chaired by President Abdrabbuh Mansour Hadi following two weeks of talks with delegates from across the country.
The federal structure should be enshrined in a new constitution that must be put to a referendum.
The move is intended to end the complaints against centralisation that fed rebellions in the north and south.
Yemen has also been struggling to deal with the unrest sparked by a 2011 popular uprising that forced long-time President Ali Abdullah Saleh to step down, and an insurgency by Islamist militants allied to al-Qaeda.