"Women will be able to run as candidates in the municipal election and will even have a right to vote," he added.
Liberal activists in the country have long called for greater rights for women, who are barred from travelling, working or having medical operations without the permission of a male relative and are forbidden from driving.
The changes will come after elections on Thursday, in which women are barred from voting or standing for office.
"This is great news," said Wajeha al-Huwaider, a Saudi writer and women's rights activist. "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."
The king did not address the issue of women being allowed to drive. Although there is no written law against women driving, they are not issued licences, effectively banning the practice. A campaign this summer by women who broke Saudi law by driving on the kingdom's city streets prompted some arrests.
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.
Activists in the country have long called for greater rights for women. Ruled by an absolute monarchy supported by conservative Wahhabi clerics, Saudi Arabia is a conservative country where religious police patrol the streets to ensure public segregation between men and women.
King Abdullah has long been pushing cautious political reforms, but in a country where conservative clerics and senior members of the ruling family oppose even minor changes, liberalisation has been very gradual.
Despite calls on social media for widespread protests in Saudi Arabia during the Arab Spring pro-democracy protests in the Middle East and north Africa, the only noteworthy demonstrations were confined to the country's east, which is home to the country's Shia minority.
Saudi Arabia will hold only its second nationwide elections in recent memory on Thursday for seats on local councils, but critics of the ruling al-Saud family say the poll, in which voting is limited to men, is a charade.
Supporters of the absolute monarchy say the elections are designed to give Saudis a greater say in politics, but critics point out that the elections are for only half the seats on councils that have few powers.
The Shura council, which vets legislation but cannot veto it or enforce changes, is fully appointed by the king.
"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," said Naila Attar, who organised the Baladi (Arabic for My Country) campaign calling for women's involvement in the local council elections.
"I believe this is a step to involve women in the public sphere. It is the top of the pyramid and a step in the direction for more decisions regarding women."
Source : Reuters