The plan, which will see 18 ministers run the country, has been sent to Libya's internationally recognized parliament for approval. But two presidential council members refused to sign the text.
The new proposals were agreed by most delegates from rival factions on Sunday. They met in the Moroccan city of Skhirat in an attempt to fill the power vacuum following Libya's 2011 revolution.
The latest plan followed the rejection of a previous cabinet proposal by the eastern parliament two weeks ago. The legislature had called the proposed government too large.
The proposals will see 13 ministers and five ministers of state take office. While most of the names on Sunday's list were different from last month's proposal, the post of defense minister, Mahdi al-Barghathi, was unchanged.
Prime Minister-designate Fayez Seraj, who also heads the Presidential Council, told reporters on Sunday that the latest appointments took into account "experience, competence, geographical distribution, the political spectrum and the components of Libyan society."
The plan will need approval from the internationally recognized parliament based in eastern Libya, but doubts remain over the rival Islamist-dominated parliament based in Tripoli.
It is hoped that the forming of a unity government will prevent "Islamic State" militants from taking advantage of the political deadlock. Over the past year, IS has carried out several attacks in Libya.
Hopes for future
Martin Kobler, the UN envoy to Libya, tweeted his congratulations. He called Sunday's announcement "a unique peace opportunity that must not be missed."
But Ibrahim O. Dabbashi, Libya's permanent envoy to the United Nations, tweeted that the proposed cabinet includes people close to dictator Moammar Gadhafi, who was killed in 2011, which "will only give parliament a reason to reject it."
Libya has been in chaos since the 2011 ouster of Gadhafi, with two rival administrations and armed groups fighting for control of the oil-rich country.
A militia alliance including Islamists overran Tripoli in August 2014, establishing its own government and parliament and causing the recognized administration to flee to the country's remote east.
mm/jm (AFP, AP, Reuters)