The Cabinet voted Sunday on the proposal, which would reserve three high-ranking officer berths for one-time leaders of the rebels.
"As all issues have been addressed, there should be no further hurdles in peace," said Bhim Rawal, a leader of the Communist Party of Nepal.
The Hindustan Times said Nepal's civil war ended six years ago and Nepal's army took control of the rebels' arms four years ago. The integration plan will result in about 45 percent of Nepal's army being made up of former rebels.
U.N. Secretary-General Ban Ki-moon congratulated the parties for the so-far smooth integration. "He urged all political parties to maintain the momentum and consensus to bring the peace process and the drafting of the new constitution to a successful and timely conclusion," the United States said in a written statement.