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It was by far the biggest change in Saudi Arabia's tightly-controlled society yet ordered by the 88-year-old Abdullah bin Abdulaziz al-Saud, who took power six years ago with a reformer's reputation but has ruled as a cautious conservative.
In practice, the measure will do little to change how the country is run: Saudi Arabia's rulers allow elections only for half of the seats on municipal councils which have few powers. Only men will vote at the next elections which will take place next week; women will be allowed to vote in 2015.
The king did not address broader issues of women's rights in a country where women are not allowed to drive and require a male relative's permission to work or leave the country.
But the announcement was hailed by liberals and activists who said it raised hopes that other demands for greater democratic and social rights might one day be met.
"This is great news," said Saudi writer and women's rights activist Wajeha al-Huwaider. "Women's voices will finally be heard. Now it is time to remove other barriers like not allowing women to drive cars and not being able to function, to live a normal life without male guardians."
In his five-minute speech, Abdullah said women would be permitted join the unelected advisory Shura Council, which vets legislation although it has no binding powers.
"Because we refuse to marginalise women in society in all roles that comply with sharia (Islamic law), we have decided, after deliberation with our senior ulama (clerics) and others... to involve women in the Shura Council as members, starting from the next term," he said.
"Women will be able to run as candidates in the municipal election and will even have a right to vote."
Washington, Saudi Arabia's ally, praised the measures, saying they offered women "new ways to participate in the decisions that affect their lives and communities".
"The announcements made today represent an important step forward in expanding the rights of women in Saudi Arabia," said a White House statement. "We support King Abdullah and the people of Saudi Arabia as they undertake these and other reforms."
Robert Lacey, author of two books about the kingdom, described the change as the first positive response to a pent-up demand for reform that has begun to emerge in Saudi Arabia as popular democracy movements spread elsewhere in the Middle East.
During the Arab Spring pro-democracy protests, Saudi activists called for demonstrations, but only tiny numbers of people responded by taking to the streets, apart from members of the Shi'ite minority in the country's Eastern Province.
Saudi Arabia responded by barring demonstrations and by announcing nearly $130 billion in social spending in March.
"This is the first positive, progressive speech out of the government since the Arab Spring," said Lacey. "First the warnings, then the payments, now the beginnings of solid reform."
In a country where even cautious change is bitterly opposed by conservative clerics and some members of the ruling family, women's rights have drawn scrutiny at home and from abroad.
The king did not address broader issues of women's social rights, such as the ban on issuing driving licenses to women, which prompted small protests this summer by women who defied the authorities and drove.
Women in Saudi Arabia must also have written approval from a male guardian -- a father, husband, brother or son -- to leave the country, work or even undergo certain medical operations.
In 2002, the Saudi religious police shocked the nation and the world when they prevented schoolgirls from evacuating a burning building because they were not wearing full Islamic attire. Fifteen died.
King Abdullah has earned a reputation as a cautious reformer since he started to run the kingdom as de facto regent during the illness of his predecessor, King Fahd.
He built a new university for students of both sexes and encouraged women to participate more in the labour market. But he did little to alter the political system, which placed absolute power in the hands of a single generation of brothers since his father, state founder Abdulaziz, died in 1953.
After entering the Shura Council chamber leaning heavily on a cane on Sunday, Abdullah read only a section of a prepared statement that was later released in full by the authorities.
Tarek Fadaak, a member of the Shura Council and former chairman of the Jeddah city council, said: "The royal decision will not be challenged... but what remains to be seen is how these directives will be applied."
Naila Attar, who organised a campaign for women to be allowed to participate in the municipal council elections, said the move marked the beginning of progress.
"Despite the issue of the effectiveness of these councils, women's involvement in them was necessary. Maybe after women join there will be other changes," she said. "It is the top of the pyramid and a step in the direction for more decisions regarding women."