A meeting of the state cabinet chaired by Chief Minister Nitish Kumar gave its nod to the proposal to set up the Commission.
Later briefing reporters, Kumar said his government was irrevocably committed to bringing in place "a sensitive, proactive, consistent and effective" administrative machinery for which the multi-member expert body was necessary to suggest ways and means for achieving the objective.
"The cabinet has given its approval to the proposal to set up the Commission under Dubey, former Chief Secretary of Bihar and Jharkhand," he said, adding experts from police, technical establishments, management, information and technology, would be members of the panel which would have a serving IAS officer as its member secretary.
NDA, in the common minimum programme for good governance, had promised to set up the Commission.
The Commission has been asked to submit its recommendations to the government within three months, Kumar said.