The controversial Telangana bill will be presented in the Rajya Sabha in the present form and the government will move 32 amendments when it is taken up for consideration.
The proposed legislation does not provide for grant of Union Territory status to Hyderabad despite demands but the government will announce a special package for Rayalaseema and north coastal Andhra to address concerns of the people there.
The Cabinet cleared the Andhra Pradesh Reorganisation Bill after a special marathon meeting which was followed by a meeting of the Congress Core Group headed by party President Sonia Gandhi. AICC General Secretary Digvijaya Singh, who is in-charge of Andhra Pradesh, was a special invite at the meeting.
At the Cabinet meeting, NCP chief and Agriculture Minister Sharad Pawar, who had earlier made a strong pitch for Telangana, questioned whether the law and order powers being given to Governor are according to the Constitution.
Although he endorsed the bill, he wanted to know what is being done for the new capital of Seemandhra, sources said.
He was told all the cost will be taken care of by the Centre.
Union Minister Pallam Raju, who along with other colleagues from the Seemandhra region, has been opposing division of the state, unsucessfully batted for UT status for Hyderabad.
With the current session being the last of the 15th Lok Sabha, the government wants that the bill should be taken up for consideration and passage during the session.
The government decided to go ahead with the bill despite the Andhra Pradesh Assembly rejecting it, with Congress Chief Minister Kiran Kumar Reddy leading the opposition to the proposed bifurcation.
Reddy even staged a sit-in here and met President Pranab Mukherjee to seek his intervention to stop division of the state.
With Andhra Pradesh sharply divided on regional lines on the Telangana issue, Parliament has been paralysed for the past three days with supporters and opponents creating uproar for their respective cause.
Three Lok Sabha members have also given notices of no-confidence motion against the Manmohan Singh government. A Group of Ministers formed on the issue considered the bill yesterday.
The ministerial panel is believed to have discussed the demands of the Union Ministers from Seemandhra which include making Hyderabad a Union Territory for a limited period and incorporating Bhadrachalam sub-division with residuary Andhra Pradesh.
In a last-ditch effort to prevent Hyderabad from being a part of Telangana, Union ministers of Seemandhra region had on Wednesday urged the ministerial panel to make the city a Union Territory and divide its revenue among Telangana and residuary Andhra Pradesh.
They had also demanded that the Bhadrachalam sub-division in the state should be incorporated into Seemandhra region as this is the submerged area of Polavaram multi-purpose irrigation project, which will be part of residuary Andhra Pradesh.