Fatah officials met Palestinian Prime Minister Ahmad Quraya in Ram Allah late on Wednesday night to iron out their differences.
The approval came after changes were made to the list of proposed ministers. All the cabinet ministers were chosen from outside the Palestinian Legislative Council (PLC), Aljazeera learned.
The prime minister was forced on Tuesday to scrap his original line-up, which had included 15 members of parliament. A Palestinian official said 20 of the 24 ministers are new faces.
The PLC adjourned review of the new formation until Thursday because of sharp differences among Fatah members.
Quraya has been trying all week to install a new cabinet.
Lawmakers objected to his first list being stacked with political friends of late Palestinian leader Yasir Arafat.
A second line-up dominated by professional appointments did not soothe legislators, either.
The legislative council is expected to vote on the cabinet at 11am (0900 GMT) on Thursday.
"Hopefully by tomorrow (Thursday) morning the Palestinian people will have a new government approved by the legislative council," said outgoing Fatah Cabinet Minister Kadura Faris.
Fatah is the largest party in the Palestinian parliament and has dominated Palestinian politics for four decades, ruling the Palestinian Authority since its inception in 1994.