The Constitutional Council backed the law on Thursday, with no reservations, leaving its fate in President Chirac's hands.
He will address the nation on Friday at 1800 GMT.
Parliamentary sources said they expected Chirac to sign the CPE jobs law on Friday, despite the risk of renewed protests.
The law cuts job security for those under 26, which Dominique de Villepin, the prime minister, says will encourage employers to hire more young workers, but the law has sparked mass protests by millions of students and unions.
Aides said Chirac would respond to the Constitutional Council on Friday and to weeks of protests around France demanding that the government dump the CPE First Job Contract law.
Thursday's Council ruling was a vindication for Prime Minister Villepin, who has championed the law as a crucial tool in his battle to cut 22.8% youth unemployment.
But opponents vowed no let up in a crisis that has sunk Villepin's approval ratings and shaken his ambitions to run for president in 2007.
They hope an April 4 national strike and mass rallies will at least match Tuesday's 1-3 million turnout.
Students have rallied across the
country against the proposed law
In a statement accompanying its ruling the Council said it had "dismissed all complaints that relate to article 8" of the equal opportunities law, the section containing the CPE First Job Contract.
The contract lets companies fire under 26s without giving a reason during a 2-year trial period, which opponents say will create a generation of "throw-away workers".
Left-wing members of parliament had challenged the law as discriminatory and a violation of France's international obligations, and said it had been passed in breach of procedural rules.
But the Council ruled the government had been within its rights to invoke a rarely used device to ram the measure through parliament.
The Council said regardless of the new law's provisions, workers hired under a CPE retained the right to challenge their dismissal in labour courts, including during the trial period.
Unions, who wrote to Chirac this week to urge him to send back the measure to parliament for redrafting, dismissed the ruling and vowed to continue their fight.
In a statement, the leading FO trade union said: "Any negotiation or dialogue (with the government), which is indispensable, presupposes that the CPE is withdrawn."
Maryse Dumas, a senior official with the large CGT union, told French radio: "The Constitutional Council rules on the conformity of the law with the constitution. It has no vocation to rule on its social legitimacy and its political content."
"The Constitutional Council rules on the conformity of the law with the constitution. It has no vocation to rule on its social legitimacy and its political content"
Senior official, CGT union
Bernard Thibault, head of the pro-communist CGT, warned of "serious consequences" if the law was not axed.
Students kept up protests, blocking several main traffic routes around France, causing traffic jams totalling 345km.
Train lines were blocked around Marseille, Rennes and in one mainline Paris station.
Whatever decision Chirac makes will be closely watched.
Commentators said Villepin, Chirac's preferred successor should he not run for a third term in 2007, had threatened to quit unless he won clear backing.
"He only has one shot and if he misses, I don't know where we're going," Le Figaro newspaper quoted a Chirac aide as saying.
"There is no good solution, we have to pick the least bad."