The House of Representatives agreed on a second cabinet list after rejecting last week an initial a 16-member lineup as too large, spokesman Faraj Hashem said.
The new cabinet has only 13 ministers and no oil minister, lawmakers said.
The vital oil sector will be run by state firm National Oil Corp (NOC). Thinni, a former career soldier, has been prime minister since March but had resigned after a June election. Lawmakers then asked him to again form a new government.
But Thinni has failed to establish rule of law in Libya, where armed groups have called the shots since the overthrow of Muammar Gaddafi in 2011. His government lost control of Tripoli after an armed group from the western city of Misrata seized the capital last month, forcing the elected parliament and government to move to eastern city of Tobruk.
The Misrata group has set up a rival parliament and government, which is not recognised by the international community.
Western powers fear Libya is heading towards civil war.
The government cannot control former rebels who helped oust Gaddafi but now fight for power and a share of oil revenues.