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The Indian Parliament had erupted in mayhem on Thursday when a lawmaker fired pepper spray in parliament in protest against the bill.
The newest Indian state will be carved out of the southern Indian state of Andhra Pradesh.
The bill will now have to pass muster in the upper house after which it will be sent for Presidential assent.
The current session of the Indian parliament, which began on 5th February, has been disrupted by those opposed to the creation of Telangana.
Supporters of the new state have long argued that economic development of the Telangana region has been disappointing compared to the richer and more powerful Andhra region.
The city of Hyderabad, home to many global IT firms and India’s sixth largest city, will remain the common capital for the two states for a period of 10 years.