"Starting next year, there will be a one-person, one-vote election held every five years," said a statement tweeted by Somalia's state media SONNA.
The position of prime minister will also be abolished.
"The Premier post will be abolished and replaced with a presidential system where the president and vice president are elected directly by the people on a single ticket," according to the official statement.
Only two political parties will be allowed to compete in the polls, according to the statement.
Amid widespread insecurity caused by an Islamist insurgency and weak state structures, in recent years lawmakers voted for the president, while clan heads and elders elected lawmakers in both the federal government and regional states.
The country had initially been scheduled to revert to universal suffrage in 2020 but protracted squabbles among politicians and persisting insecurity across the country forced the government to retain the indirect ballot.
The direct-vote decision was reached after a four-day meeting in the capital Mogadishu, chaired by President Hassan Sheikh Mohamud. SONNA did not say who else participated in the meeting.
Nationwide local council elections, the first poll under the new system, will be held in June next year while voting for regional lawmakers will take place in November 2024, according to the statement.
Mohamud, who has a five-year mandate, was elected in May last year by lawmakers.