Petro Poroshenko's official website said the pro-Western leader told top lawmakers the proposal would be part of a broader deal with the pro-Moscow rebels. He intended to formally submit it to parliament tomorrow.
The bill also extends the right of people in the rebel-held Lugansk and Donetsk regions to use Russian in state institutions and conduct local elections on November 9, according to media reports.
The bill further permits the regions to "strengthen good neighbourly relations" between local authorities and their counterparts in Russia.
He urged parliamentary faction leaders today to quickly back his efforts to end five months of fighting that have killed more than 2,700 people and forced more than half a million from their homes.
Poroshenko said his proposals guaranteed "the sovereignty, territorial integrity and independence of our state".
The presidential website said the three years of limited self-rule would give his government a chance to implement "deep-rooted decentralisation, which will be the subject of corresponding constitutional changes".