HONG KONG — Beijing will allow Hong Kong to directly elect its leader by 2017 and all its lawmakers by 2020, the territory's chief executive said Saturday.

Donald Tsang said the move was a "most important step" in the former British colony's political future.

The government in Beijing has been debating Hong Kong's political development and had been expected to announce its decision later Saturday on a timetable for allowing direct elections.

Tsang, however, announced the decision during a televised press conference early Saturday.

"We are grateful and we welcome Beijing's decision. It sets a clear timetable for electing the chief executive and legislators," Tsang said.

The issue of electoral reform has polarized Hong Kong's political camps, with pro-democracy parties wanting greater political freedoms by 2012 and pro-Beijing parties camp pushing for 2017.

Tsang said parties should put aside their differences.

"We must treasure this hard-earned opportunity," he said.

When Hong Kong returned to Chinese rule in 1997 it was granted a wide degree of autonomy and a pledge that it would ultimately be allowed to directly elect all of its legislators and its leader, although no date was ever given.

A decade on, still only half of the 60-seat legislature is elected, and the territory's top leader, or chief executive, is chosen by an 800-strong committee full of Beijing loyalists.

Democrats say the city — a bustling international financial center— is mature enough to choose its own government. Beijing and its allies want a more gradual approach.