The coalition had pledged to resolve the issue by the end of April
Former Pakistani PM Nawaz Sharif says all the senior judges sacked by President Pervez Musharraf last year will be reinstated on 12 May.
He led his PML-N party in two days of talks with the biggest party in the new coalition government, the PPP, to resolve differences over the judges.
The issue has threatened to split the coalition, with the PPP wanting the power of the judiciary to be reduced.
There was no immediate reaction from Mr Musharraf to the announcement.
Nor did PPP leader Arif Ali Zardari comment on the news.
The judges were dismissed when President Musharraf declared a state of emergency in November.
Supreme Court judges had been due to rule on whether his re-election was legal.
They had also been due to rule on a controversial amnesty covering Mr Zardari and his wife Benazir Bhutto, who was later assassinated.
"I want to inform the entire nation that on Monday 12 May 2008, all deposed judges will be restored," Mr Sharif told journalists in Lahore. "The national assembly will approve a resolution the same day."
March 2007: President Musharraf suspends Supreme Court chief justice, triggering protests
6 Oct 2007: President Musharraf wins election
3 Nov 2007: President declares state of emergency and sacks around 60 judges
22 Nov 2007: New Supreme Court upholds Musharraf election win
18 Feb 2008: New coalition government of PPP and PML-N emerge victorious in parliamentary polls
30 April 2008: Deadline set by two parties to reinstate sacked judges
The judges include Iftikhar Chaudhry who, as Supreme Court Chief Justice, became a focal point for opposition to President Musharraf last year.
Mr Sharif's party has campaigned for the unconditional reinstatement of the judges.
Mr Zardari has been wanting the reinstatement of the judges to be part of a larger package of constitutional amendments which would include the weakening of their powers.
Work on that package will continue separately.
The BBC's Barbara Plett in Islamabad says the question now is how President Musharraf will respond.
He has accused Mr Chaudhry in particular of leading a political campaign against him.
The differences between Mr Sharif and Mr Zardari became so serious that the two men had to hold two days of talks in Dubai, where Mr Zardari lived for many years with Mrs Bhutto when she was in self-imposed exile.
On his return to Pakistan, Mr Sharif told reporters the judges would be reinstated "with dignity, respect and honour".
President Musharraf sacked about 60 judges under the state of emergency. All of them - at Mr Zardari's insistence, said Mr Sharif - will retain their jobs.
After the Dubai talks concluded, Mr Sharif said he was "fully satisfied" by the progress made.