"A technical committee of specialists is to be formed topropose amendments to the state basic law to this effect," the decree said, after weeks of anti government protests in the strategic Gulf state.
The committee should present its report to the sultan within 30 days, it said. The announcement comes a week after the sultan sacked controversial ministers in a major cabinet reshuffle after rare protests flared up last month in the usually placid Gulf nation. The economy and interior ministers were among at least 12 cabinet members to lose their jobs in the 29-member cabinet.
The new amendments would give Oman's representative council the edge over its peers in the Gulf region, where only Bahrain and Kuwait have elected parliaments with legislative and regulatory authorities.
Saudi Arabia, Qatar and the United Arab Emirates, have councils that are mostly appointed and serve only as advisory bodies.
Oman's Council of State has 57 members appointed by the sultan and serves as the upper house of parliament. The "lower house" consultative council has 83 elected members, but currently serves only as an advisory body matters excluding defence, security and foreign policy, which are the exclusive domain of the sultan.
Demonstrators are demanding more representation, jobs, better pay and an end to corruption but insist they do not want to topple the revered sultan, who has ruled for 40 years.
They have been holding a peaceful sit-in at Earth Roundabout in the northern city of Sohar since February 27, when at least one protester was killed in clashes with police.
Despite that incident, the sultanate of around 2.5 million people has been spared the violence that has gripped other Arab states including Egypt, Tunisia, Libya and neighbouring Yemen. Oman is a Western ally on the strategic Strait of Hormuz, through which 40 percent of the world's oil shipments pass.
In an effort to placate the protesters, Sultan Qaboos has also announced the creation of 50,000 new jobs, a monthly allowance for registered job seekers and a higher minimum wage for nationals working in the private sector.