The creation of 'South Ethiopia Region' - the third new state created since Prime Minister Abiy Ahmed came to power in 2018 - was "approved with a unanimous vote" by the upper house Wednesday, it said in a statement.
"Following the desire expressed through a referendum by the six zones and five special districts... the House of Federation has in today's regular session decided to have them be organised in a regional state," it said.
Voters in part of the ethnically-diverse Southern Nations, Nationalities and Peoples Region (SNNPR) overwhelmingly supported carving out their own state in a referendum in February.
It is just the latest state to break away from SNNPR, a mosaic of minority ethnic groups in the country's south, and scene of tension and violence in recent years.
Sidama separated in 2019, and South West in 2021.
Shortly after taking power in the early 1990s, the Ethiopian People's Revolutionary Democratic Front coalition government divided Ethiopia into nine semi-autonomous regions organised along ethnic and linguistic lines.
The 1995 constitution required officials to organise a referendum for any ethnic group that wanted to form a new region within the federal system.
But the former government, ruled by Tigray's minority ethnic elite, quashed such efforts, sometimes violently, during its 27 year rule.
Abiy's appointment in 2018, following several years of anti-government protests, breathed new life into autonomy bids and identity-based claims.
In recent years, the country of 110 million has been troubled by sometimes deadly conflicts over these administrative divisions and associated disputes over territory.
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