Nepal's prime minister, Girija Prasad Koirala, has pledged that a future Nepal will be federal in nature.
This is one of the main demands of southern Nepalese who have been demonstrating for the last two weeks.
Eight people have died in the protests. However, there have already been protests saying the prime minister has not conceded enough.
Nepal recently formed an interim coalition after its King abdicated power ending a decade long civil war.
Mr Koirala did not mention by name the Madhesis, or southern Nepalese, whose ongoing protests have resulted in the deaths.
But he did say all problems must be solved through dialogue, and that he had instructed a minister to form a committee to initiate this.
Devolution required
Madhesis are very much under-represented in government structures. One of their demands is for devolved, federal-style government.
Mr Koirala has now promised that a new permanent constitution, due to be written by an assembly elected later this year, will make Nepal a federal state.
He has also said he accedes to another of their demands, which is to increase the number of electoral constituencies in densely populated areas.
These include the southern plains.
Demonstrators in one southern city, Janakpur, have already staged protests against Mr Koirala's speech saying it does not go far enough.
An indefinite curfew in another city, Biratnagar, has already lasted more than 24 hours.
A BBC correspondent there says Madhesi protestors armed with bows and arrows are defying it.
Others have set a police station on fire. Police responded with teargas and live rounds.
Many of the southern protests have been peaceful but a steady stream of northern hill people who were living in the south have started fleeing their homes after being threatened.