Lawmakers unanimously passed the Constitution of Kenya Bill and the National Accord and Reconciliation Bill at a session attended by Kibaki and rival opposition chief Raila Odinga.
Both Kibaki and opposition leader Odinga claimed victory in the Dec. 27 presidential election, but observers said that the election was so flawed by rigging that it was impossible to say which candidate had won.
Under the deal, Odinga will fill the newly created post of prime minister.
The deal has raised hopes of a permanent end to the violence that erupted when Kibakis re-election in the December 27 polls was challenged by Odingas Orange Democratic Movement (ODM) with accusations of vote rigging.
This years bloodshed, spurred by clashes and resentment over land and wealth that regularly occurs at election time in Kenya, was the bloodiest so far. An unprecedented cycle of protests, police raids, tribal clashes and revenge killings left at least 1,500 people dead and hundreds of thousands displaced following the December elections, dealing a huge blow to east Africas largest economy.