South Ossetia broke away together with Abkhazia in the 1990s following bloody conflicts. Georgia's current pro-Western leadership has been seeking to recover its influence in the separatist regions and secure international support on the issue.
"It [the law] marks the beginning of an important stage in the political and peaceful resolution of the conflict," Nino Burdzhanadze, speaker of the parliament, said, and urged the current and alternative leaderships to start a dialogue.
Under the law, the new provisional administration will represent the Georgian president in the area, promote the peace process, and help rehabilitate the local infrastructure. The law also says the interim government could eventually pass its authority to local political forces.
Georgian leader Mikheil Saakashvili who came to power on the back of the "rose revolution" in 2003 has also installed a pro-Tbilisi government in another breakaway region, Abkhazia. Georgian authorities are accusing Russia, whose peacekeepers have been in the conflict zones since 1993, of fuelling separatist sentiments in the breakaway republics.