The project includes plans to float a stake in the world’s largest oil company and set up one of the world’s largest government investment funds.

King Salman announced the approval for the “Vision 2030” plan in a short televised announcement on Monday in which he called on Saudis to work together to ensure its success.

The king’s son, Deputy Crown Prince Mohammed bin Salman, spelled out some details of the programme in a pre-recorded interview aired shortly after the announcement on Saudi-owned broadcaster Al-Arabiya.

The prince is second in line to the throne, serves as the country’s defence minister and chairs a committee formed soon after his father’s ascension last year overseeing economic policy-making.

That committee, the Council on Economic and Development Affairs, has been focused on reorienting the kingdom away from its heavy reliance on fossil fuels, creating jobs and boosting foreign investment.

In the wide-ranging interview, Mohammed bin Salman described the country as having become addicted to oil and said a planned partial initial public offering of the state-owned oil company Saudi Aramco was part of the reform programme.

He valued the oil giant at more than 2 trillion US dollars (£1.37 trillion), and said that less than 5% of Aramco would be offered to public shareholders.

The Aramco shares would be listed on the Saudi stock exchange, known as the Tadawul, and on an international exchange, possibly in the United States.

“The vision is a road map of our development and economic goals,” he said. “Without a doubt Aramco is one of the main keys of this vision and the kingdom’s economic renaissance.”

The prince discussed plans to set up a 2 trillion dollar sovereign wealth fund that would be managed by an outside board of directors, and not Aramco.

The fund’s revenues would go into developing the kingdom’s cities, he said.

He said the economic goals of the reforms are intended to eliminate housing and unemployment problems and ensure that water and energy subsidies go to those most in need.

Another way to drive up non-oil revenue, the prince said, is by investing more in mineral mining and boosting the kingdom’s own military production capacity.

Saudi Arabia was the world’s third largest arms buyer last year, with purchases of more than 87 billion dollars (£60 billion) last year.

The prince also said the kingdom, which annually welcomes millions of Muslim pilgrims to the holy cities of Mecca and Medina, would become more open to other types of tourists – in line with Saudi Arabia’s values.

A new residency visa programme could generate additional revenue and would allow Muslims and Arabs to live for extended periods in the country, he said.

Lower oil prices have exposed Saudi Arabia to urgent domestic challenges, including a projected budget deficit this year of nearly 90 billion dollars (£62 billion).

Despite past efforts to move the economy away from its reliance on oil, the kingdom’s main export still accounted for 72% of total revenue last year.

In addition, 70% of Saudis work in the public sector, where the government is spending heavily on wages.