The fiscal pact, signed in March and committing governments to tight deficit limits, must be ratified by 12 of the 17 eurozone countries before it can come into force in January, with the aim of calming investors concerned at heavy public debts.
The court's ruling opens the way for Hollande's Socialist government, which had insisted it did not want to write a budgetary rule into the constitution, to implement the pact as soon as September using a "super-law" that requires only a simple majority in parliament.
A constitutional reform would have required a three-fifths majority in a special joint session of parliament and could have entailed an in-depth debate on Europe which could have exposed divisions in Socialist ranks.
German court ruling expected in September
Hollande urged his government to quickly draft legislation to implement the EU's budget responsibility pact after the Constitutional Council ruling.
"The President calls on the government to rapidly prepare a draft law authorising the ratification of the pact as well as a draft organic law to guarantee the appropriate application of the text," Hollande's office said in a statement.
The fiscal pact, which 25 EU states signed up to in March, obliges governments to write into national law a commitment to restrict structural deficits to within 0.5% of gross domestic product under normal circumstances.
Several countries, including Italy and Germany, have already ratified the pact, but Germany's constitutional court is examining complaints over whether it complies with national laws and will make its ruling on 12 September.