Abdallah, in a weekend decree issued after consultative talks with top Muslim clerics, said that women would be allowed to run as candidates in local elections and given the right to vote.
The king stressed that the decision is intended to affirm the role of women in society and to discontinue their marginalization. Women have defied social constraints recently by pressing for more rights, including the right to drive.
British Foreign Secretary William Hague, in a statement, welcomed the decree as a "significant" step forward to the Saudi people.
Tommy Vietor, a spokesman for the U.S. National Security Council, in a statement from Washington, said the U.S. government supports Riyadh's reform efforts.
"These reforms recognize the significant contributions women in Saudi Arabia make to their society and will offer them new ways to participate in the decisions that affect their lives and communities," he said.
Juan Cole, a Middle East expert at the University of Michigan, writes on his Informed Comment blog that extending political rights to women may be part of an effort by the ruling monarchy to quell frustrations with the royal family.
"An even bigger question is whether the Saudi dynasty, among the last absolute monarchies in the world, is moving fast enough to avert a revolution," he adds.
Street protests in early March were muted with a heavy police presence reported in the country. Shiites in the eastern part of the country were calling for more freedoms from the Saudi family that has ruled the country for most of the last 100 years.