The issue was the subject of a long dispute between hardline Salafi Islamists and liberals in the assembly which will vote on each of 234 articles in the draft constitution before it is sent to President Mohamed Mursi for approval.
After that, Mursi must put it to a popular referendum.
The Muslim Brotherhood, the Islamist group that nominated Mursi for the presidency, hopes that quick approval of the constitution will help end a crisis ignited by a decree that expanded his powers.
While Article Two of the constitution - describing the source of legislation - stays the same, the constitution includes new provisions explaining what is meant by "the principles" of Islamic law, known as sharia.
The assembly also approved a new article that states that Al-Azhar, a seat of Sunni Muslim learning, must be consulted on "matters related to the Islamic sharia".
The final draft makes historic changes to Egypt's system of government. For example, it sets a limit on the number of terms a president may serve to two. Mubarak stayed in power for three decades.
It also introduces a degree of civilian oversight over the powerful military establishment, although not enough for some critics of the document.
The process has been plagued by disputes between the Islamists who dominate the body writing the constitution and secular-minded parties who say the Muslim Brotherhood and its allies have marginalized them in the process.
Prominent assembly members including former Arab League Secretary General Amr Moussa have withdrawn from the assembly, as have representatives of Egypt's Coptic Church.
The Islamist-dominated drafting panel was accused by secularists and Coptic Christians of railroading the charter. Protests have mounted over President Mohamed Mursi's assumption of sweeping powers, which has plunged the country into its worse crisis since he took office in June.
A court had disbanded a previous constituent assembly and was due to rule on the validity of its replacement on December 2. Liberals and representatives of Christian churches had already withdrawn from the panel.
Mursi last week stripped courts of the power to disband the panel in a decree that gave him broad powers which cannot be challenged by courts, sparking a judicial strike and largest opposition rallies since his June election.
The official Al-Ahram newspaper reported that Morsi would give an address at 1700 GMT Thursday, in which he is expected to defend his decree.
More to follow...
(Reuters, Al-Akhbar, AFP)
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