"Assad on Thursday proclaimed a presidential decree on the law of the parties," SANA reported.
The decree allows political parties to be established and to function alongside the Baath party, in power since 1963 with the constitutional status of "the leader of state and society".
The Syrian government adopted a draft law on multiple political organisations last month. At the time, SANA reported the draft legislation was "aimed at enriching political life, creating a new dynamic and allowing for a change in political power".
"The bill stipulates the essential objectives and principles governing the activities of parties, conditions for their establishment ... and rules relating to their financing, their rights and their obligations," SANA said.
It prohibits parties founded on the basis "of religion, tribal affiliation, regional interests; professional organisations as well as parties which discriminate on the basis of race, sex or colour," the report said.
Assad's decree means the law can take effect immediately without parliament's approval. Political pluralism has been at the forefront of demands by pro-reform dissidents who since March 15 have been taking to the streets across Syria almost daily to call for greater freedoms.
The decree came hours after the UN Security Council stepped up pressure on Syria's rulers by condemning the bloody crackdown and saying those responsible should be held accountable.