JAKARTA, Indonesia—Indonesian lawmakers on Monday set the stage for the government to raise the price of subsidized fuel for the first time in years, a move championed by economists but deeply unpopular with millions of voters.

The legislative action signals the end of a long road to reforming the costly subsidy, a process President Susilo Bambang Yudhoyono had found difficult to complete as he nears the end of a decade in power. Indonesia holds direct presidential elections in 2014.

After more than 11 hours of deliberations, legislators voted to approve revisions to the state budget allowing for the distribution of cash aid to Indonesia's poorest citizens to help compensate for the fuel-price increases. Mr. Yudhoyono requested the allocation to ease the shock the higher prices would have on tens of millions of Indonesians living below the poverty line.

Mr. Yudhoyono's administration is expected in the coming days to announce an increase in fuel prices, for the first time since 2008, by about 44% for low-grade gasoline and 22% for diesel.

Indonesia has heavily subsidized fuel for years, a legacy of more than three decades of rule by former strongman Suharto that gave the country some of the lowest-cost fuel in Asia. "It's normal if there are people who can't accept" the increase, presidential spokesman Julian Aldrin Pasha told reporters shortly before the vote. "But we hope people can come to accept it and understand the government's reasons."