The union cabinet Friday gave its nod to the Telangana bill and paved the way for its tabling in parliament after a presidential assent, official sources said.
The approval came after a two-hour long special cabinet meeting held at the Prime Minister's House at 7 Race Course Road here.
The decision to convene a cabinet meeting on Telangana was taken after a meeting of the Group of Ministers on the issue Thursday.
Sources said there was no proposal to give union territory status to Hyderabad, which would be the joint capital of the two states after bifurcation of Andhra Pradesh.
The current bill envisages Hyderabad as joint capital for Telangana and residual Andhra Pradesh for the first 10 years after the state's bifurcation.
The Telangana issue has continued to disrupt parliament since it began on Feb 5 this month with business in both houses paralysed due to protests by members belonging to Seemandhara and Telangana.
The bill has been rejected by the Andhra Pradesh assembly.