WASHINGTON--In return, VeriSign will give up control of the .org domain along with a $5 million payment in 2002, the department said.
Although approval came later than expected--the deadline for the review was Monday--the terms of the deal, announced in March, were only altered slightly.
VeriSign will maintain control over the popular .com domain, which accounts for roughly three quarters of all Internet addresses, through 2007 and can renew its control at that point.
Rights to the .net registry would be open to competitive bidding in June 2005, six months earlier than originally planned.
"Our goal throughout the negotiating process was to make sure consumers reap the benefits of an open, stable and competitive Internet," Commerce Department General Counsel Ted Kassinger said in a statement.
A VeriSign spokesman said the company was pleased with the deal. "It certainly provides us clarity to move forward in our business and gives us the focus we've been seeking," said spokesman Brian O'Shaughnessy.
If VeriSign continues its dominant position in the Internet address marketplace, bidding on the .net registry would be moved up to November 2003.
The deal has been criticized by competitors and others as not going far enough to open the market to competition.
Regulators at the Commerce Department met this week with officials from VeriSign and the Internet Corporation for Assigned Names and Numbers, the Internet's standards-setting body, to review the deal.
To enhance competition, the department said VeriSign had agreed that approval of the arrangements did not give the company antitrust immunity.
VeriSign will also be subject to annual independent audits, to ensure the separation between its business of keeping the registry of Internet addresses and its business of registering new addresses.