Nyusi told journalists in Maputo that he had agreed in principle with Renamo leader Afonso Dhlakama to cease all military operations against each other for the next two months.
He said the ceasefire would be extended until the first sitting of the Mozambican parliament in March when the points raised by Renamo are expected to be discussed.
“This shows that we must restore confidence to Mozambicans through dialogue," Nyusi said after agreeing with Dhlakama during a telephone conversation.
The extension follows last week's seven-day ceasefire agreed by the two sides.
Nyusi however reiterated that the will of the Mozambicans is to have a peace not based on ultimatums.
"We cannot hold peace to ransom. Ceasefire can be reached but the common interest is to ensure that there is effective peace," Nyusi said, adding he would issue another statement on Tuesday to confirm the pact.
Renamo is demanding administrative control of the six provinces in which it won the most votes in general elections held in 2014 as well as the inclusion of its militia in the army and the police.
Frelimo is insisting that Renamo should disarm first before any agreements can be reached.