"The people of Aceh will have the right to establish a political party within one year's time," Malik Mahmood, prime minister of the exiled political leadership of the Free Aceh Movement (GAM), said on Friday.
"This is a breakthrough indeed."
Indonesian government negotiators at peace talks in Helsinki could not immediately be reached for comment, but Information Minister Sofyan Djalil said earlier he was "99%" sure a blueprint for a truce could be agreed upon on Saturday.
The conflict in Aceh has killed some 15,000 people.
Both sides were prompted to resume talks that collapsed in 2003 by December's tsunami, which laid waste to the province and left nearly 170,000 Indonesians missing or dead. Hopes of a deal grew when GAM dropped its historic demand for full independence.
European Union ceasefire monitors and Indonesian military were already discussing how to implement a deal on the ground in Aceh, which lies on the northern tip of the island of Sumatra, when the Helsinki talks tripped on GAM's political demands.
The rebels, whose leaders have lived in exile in Stockholm for nearly 30 years with their ageing monarch, Prince Hasan di Tiro, wanted assurances they could contest elections in the province of 4 million people as a proper political party.
Under Indonesian law parties must have a headquarters in Jakarta and branches in more than half of the 33 provinces. The government was reluctant to change the law to accommodate GAM, fearing similar demands from other ethnic or religious groups.
It offered instead to let GAM stand under the umbrella of 10 existing political parties, though nationalist legislators objected that this was too big a concession to GAM.
The rebels initially dismissed this offer as "undemocratic" and details of the compromise deal were still unclear late on Friday, but Djalil said any differences were being ironed out.