But analysts said the change did not offer a real opening for Egyptian opposition parties, which now have about 1 percent representation in the assembly.

The next presidential election is expected in September. President Hosni Mubarak, 82, in power for nearly 30 years, has not said if he will seek a sixth six-year term, but is widely expected to.

Article 76 of Egypt's constitution on how a president is elected was amended in 2007 to say parties must have at least three percent of seats in the upper and lower houses to field a candidate. But it said parties with just one seat could field a candidate till 2017.

"The law implements the constitutional amendment," said Cabinet spokesman Magdy Rady, adding the law would be submitted to parliament so it could be approved before the next presidential election.

Mubarak's National Democratic Party holds an overwhelming majority of seats in both houses of parliament. Just handful of the 518 seats in the lower house are held by opposition parties.