Prime Minister Prayut Chan-o-cha said on Tuesday he would use a special order that gives the military sweeping powers to lift a ban on political activity that has been in place since a 2014 coup, paving the way for a 2018 general election.
Major political parties had urged the government for months to lift the ban to allow parties to prepare for the vote and the announcement won some applause from government critics.
Gen Prayut, who is also head of the junta, has said that Thailand will hold an election in November 2018 - news that was largely welcomed by investors.
"The government will have to use Section 44 to solve this problem (political activity deadlock)," Gen Prayut told reporters, referring to a constitutional clause that grants the military absolute powers.
Gen Prayut did not say when the order would take effect.
According to the usual procedure, executive orders must be published in the Royal Gazette before they can become law.
Thanawut Wichaidit, spokesman for the red-shirt United Front of Democracy Against Dictatorship which opposes military rule and has made statements critical of the junta, said the announcement was "the first step for elections and democracy".
"It's definitely a good thing," he said, adding that the junta should also lift a ban on public gatherings.
Under the Political Parties Act, which took effect on Oct 8, political parties have 180 days from that date to prepare for the upcoming election.
Within 90 days - by early January - they are obliged to submit the number, identities and qualifications of all party members.
Within 180 days, or by April 5, they must have at least 500 members, finish collecting membership fees from them, register seed funds of not less than 1 million baht, elect party leaders and executives, write a party manifesto and regulations, set up provincial branches and prepare primary-vote procedures.
Almost all parties have expressed concern that they would not be able to complete the activities in time, considering that they have yet to be allowed to hold any party meetings.
The military has been running Thailand since the May 2014 coup following the ousting of the civilian government of Prime Minister Yingluck Shinawatra, ending years of political turmoil, including pro- and anti-government street protests.
A coup in 2006 ousted Yingluck's brother, former Prime Minister Thaksin Shinawatra, whose supporters have dominated the polls since 2001.
The 2014 coup saw some Western countries downgrade ties with Bangkok. Earlier this month, the European Union said it would resume political contact "at all levels" with Thailand after putting relations on hold.
That announcement came after Gen Prayut said in October that a general election would be held next November.