Chief Minister K Chandrasekhar Rao, who held a review with his Cabinet colleagues and officials, also decided to undertake recruitment of teachers and police constables, a release from his office said.
The decisions, aimed at benefiting about 50,000 people, have been taken as a New Year gift, it said.
The policy is to put an end to the system of contractual employment in the state government, the release quoted Rao as having said.
He also directed officials to take up recruitment of about 15,000 to 20,000 teachers through the District Selection Committee (DSC) process as well as about 9,000 police constables, it added.