Odinga is to become the country's first prime minister, Voice of America reported. Kibaki defeated Odinga in a disputed election in December, setting off political violence that left more than 1,000 people dead.
The constitution was also changed to create two deputy positions, and Parliament passed legislation ratifying the power-sharing agreement.
David Musila, a member of Parliament, said officials hoped to do more than end the violence.
"What Kenyans should expect from today is that there'll be new kind of governance," he said. "We would have a prime minister sharing power with the president and at the same time we are returning the country to normalcy. As you know, we've had violence and blood shed, and we have a lot of ideas. So Kenyans should expect that solutions to these problems would be found by the new government."
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