The army, which seized power in 2014 promising to end prolonged political turmoil, had initially promised to hold an election in 2015 but subsequently said a new constitution had to be put in place first.
The king's endorsement has now set in motion a sequence of events which will eventually lead to a general election and an end to military rule, the prime minister said in a televised speech.
"The government cannot set the exact date of the election, because it is not yet possible to pre-determine the beginning dates of each successive events," Mr Prayuth said.
The maximum time prescribed in the constitution for these steps to be completed is 19 months, meaning it could be late 2018 before a ballot and unforeseen delays are still possible.
The new constitution is Thailand's 20th since the end of absolute monarchy in 1932 and critics say it will give the generals a powerful political say for years, if not decades.
But the orders it has issued in the name of national security under an executive power known as Article 44 will remain legally binding for future governments, he added.
Politicians said they were optimistic about the election prospects. Thailand's main political division remains between a Bangkok-based, strongly royalist and pro-army elite and poorer supporters of the Shinawatra movement, particularly from the rural north and northeast.
Parties led by the Shinawatra clan have won Thailand's last three elections.
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