Announcement follows growing protests in the Horn of Africa country.
Ethiopian Prime Minister Hailemariam Desalegn said Tuesday his government wants to reform the country's electoral system, which has excluded the opposition and prompted months of bloody protests.
"Because of this electoral system 51 per cent of votes is enough to win all the seats," he told journalists after a meeting with German Chancellor Angela Merkel.
"We want to reform the electoral system so the voices of those who are not represented can also be heard in the parliament."
Under Ethiopia's current system, Hailemariam's ruling coalition took every one of the 546 seats in parliament during last year's election.
Merkel, who is on a three-nation Africa tour aimed at fighting terrorism and stemming the migrant influx to Europe, told Hailemariam that a "vibrant democracy needs opposition, it needs free media."
Ethiopia on Sunday declared a six-month state of emergency, and has restricted Internet access to prevent protesters from organising themselves, as the regime faces its biggest challenge in the 25 years since coming to power.
The country's Oromo and Amhara communities — which together make up 60 per cent of the population — have been protesting for nearly a year against marginalisation by the minority Tigrayan government, which controls power and the economy.
Merkel called for "open talks" with the opposition and offered Ethiopian police training from the German interior ministry in the use of appropriate force.