By Omer Farooq BBC News, Hyderabad

The hardline Vishwa Hindu Parishad has opposed the move

The state cabinet took the decision on Friday in light of the findings of a special commission.

Hardline Hindus had opposed the policy when it was floated last year and a court that was hearing their objections recommended the commission be set up.

Muslims make up about 10% of the 78m population in Andhra Pradesh.

Eligibility

The matter now goes to the state governor who will issue an order that will then go to the state assembly before it comes into law.

It is not known whether the hardline Vishwa Hindu Parishad, or World Hindu Council, which took its original objections to court, will file another challenge.

Under the policy, children of people earning more than 250,000 rupees ($5,700) a year will not be eligible for a reserved job.

Neither will be children of top government officials.

The government says the law will be enforced this year.

A number of other states in India have a percentage of Muslim-reserved jobs.