They will also be able to run in future elections when the next term arrives.
The revolutionary move was welcomed by activists who have campaigned for women’s rights.
King Abdullah announced the move during a speech at the opening of the new term of the Shura Council, an appointed formal body who advises the king on many issues affecting the country.
“Because we refuse to marginalise women in society in all roles that comply with sharia, we have decided, after deliberation with our senior clerics and others… to involve women in the Shura Council as members, starting from next term,” he said on state television.
“Women will be able to run as candidates in the municipal election and will even have a right to vote.”
Saudi Arabiacurrently enforces restrictions on women, based on the Wahhabi version of Sunni Islam.
Men and women are forbidden from mixing together in public, including schools, restaurants and queues.
Women are also banned from driving and the repercussions for breaking this law often leads to arrest.
King Abdullah, has promised to give more freedom to women and began this change when he opened the first co-education university in 2009.
He also appointed the Nora bint Abdullah al-Fayez as deputy minister in the same year, and said he will allow women access to jobs.