Shaikh Khalifa bin Zayed al-Nahyan's comments came a day after he said the country would hold elections for half of the advisory Federal National Council (FNC), the first such vote since the federation of seven semi-autonomous emirates was formed in 1971.
He gave few details on how the delegates would be chosen or on the timing of the vote.
The FNC has little legislative power in the UAE, whose highest federal authority is a Supreme Council comprising the seven rulers. The ruler of each emirate picks its 40 members.
Reformists have called for the FNC to become an elected parliament with the power to propose laws and discuss public issues without permission from the cabinet.
The mechanism outlined on Friday said the ruler of each emirate would form local assemblies, which would then elect half the FNC members from among themselves. It was not clear how the local assembly members would be chosen.
The comments carried on state news agency WAM suggested the FNC would eventually be formed through direct elections among the Emiratis. The body will also take on more of a parliamentary role.
"The FNC [Federal National Council] will take the necessary constitutional steps to prepare for direct elections"
Shaikh Khalifa bin Zayed al-Nahyan
"We will propose a constitutional amendment to strengthen the council's authorities ... and raise the number of members to match the rising population," Shaikh Khalifa was quoted as saying.
"The FNC will take the necessary constitutional steps to prepare for direct elections."
Emiratis are a minority of about 20% in the UAE, with the rest made up of expatriates, many of whom are life-long foreign residents. Analysts say this minority status has been a disincentive to reform for the country's rulers.
The UAE is hoping that ongoing talks will lead to a free trade agreement with the United States, which is leading a drive for democratic reform throughout the Arab world.
There is no outward political dissent or religiously-influenced violence in the relatively liberal UAE, but it is the only country without elected bodies in the mainly conservative Gulf region after Saudi Arabia held municipal elections earlier this year.