The 35-year-old actor has been negotiating a divorce deal with his ex for the last two years but the couple have finally agreed on a settlement.
The deal with Demi paves the way for Ashton and 30-year-old Mila - who was voted the sexiest women in the world earlier this year - to get engaged.
“Thankfully Demi’s turned a corner. She’s no longer bitter and she wants the divorce over and done with as soon as possible so she can get on with her life too.
“They’re all happy and the papers are signed and with the lawyers now, so Ashton’s free to officially propose to Mila.
“Both of them want to marry and have children.”
The former 'That 70's Show' co-stars - who started dating in April 2012 - first sparked engagement rumours in September when Mila was spotted with a gold band on her wedding ring finger.