Israel is to lift its ban on same-sex couples adopting children by June 2018.
The government told the Supreme Court it intends to change the law by next year.
The announcement comes after the current law, which defines adoptive parents as “a man and his wife”, was widely criticised.
The government had previously suggested that having gay parents would be “baggage” for adopted children.
However, LGBT rights groups presented a petition to the High Court attacking the current policy as “discriminatory”.
The petition was filed by the Israel Movement for Reform and Progressive Judaism and the Association of Israeli Gay Fathers against the Justice Ministry and the Labour Social Affairs and Social Services Ministry.
But the state agreed to push forward legislation making adoption policies equal for gay and straight couples.
The government told the court it would support "cancelling the threshold condition of the relationship [of the adopting parents] being specifically between 'man and woman'".
Riki Shapira Rosenberg, a lawyer who backed the petition, said: "The court recognised the merits of the petition presented to them and decided to encourage a fundamental change in Israel’s adoption policy.
“From now on same sex families, who deserve the right to adopt like any other family, will have that right.
"We will continue to closely monitor the legislative processes following the petition to ensure that the government follows through on its commitment and soon."
High Court Justice Esther Hayut warned the government that “if things don't progress at the proper pace, it's always possible to return and monitor [matters]. The courthouse doors are always open.”
The Gay Fathers' Association said it would hold the government to its June 2018 deadline, asserting in a statement that it would "return to the court to demand justice, if it is delayed".
Last month, the same court ordered the government to change the law around surrogacy.
It ruled gay people should have the same rights to become parents as straight couples, giving the state six months to change the law.