Lukic, 37, was arrested yesterday in Buenos Aires.
He has admitted during a hearing before a judge that he had used fake documents and waived his right to contest extradition, the Argentine state news agency Telam said.
That could speed up his handover considerably.
Judge Jorge Urso authorised the extradition under an international treaty relating to suspects accused of crimes against humanity.
Lukic will remain under the custody of Argentine federal police until extradition proceedings are finalised.
Lukic was arrested in an apartment in Buenos Aires’ upscale Recoleta neighbourhood.
In 2000, the ICTY indicted him, his cousin Sredoje Lukic and Mitar Vasiljevic for war crimes against non-Serb civilians in during Bosnia’s 1992-95 war.
The indictment against the three specifies war crimes, crimes against humanity and violations of laws and customs of war.
It blames Lukic’s group for murdering around 150 people in the Visegrad area in eastern Bosnia Herzegovina, near his native town of Foca.
Bosnia would also seek his extradition to put him on trial, officials said today in Sarajevo.
Lukic is the second suspected Serbian war criminal detained in Argentina after the arrest of Nebojsa Minic in May.
Serbia has requested the extradition of Minic, 40.
Lukic was also wanted by a Serbian court, which last month sentenced him in absentia to 20 years in prison for abduction and murder of 16 Bosnian Muslims from a bus at Sjeverin, on the border between Bosnia and Serbia in 1993.
Born in Foca, in eastern Bosnia in September 1967, Milan Lukic also resided in the Belgrade area, Germany and Switzerland, before returning to Bosnia in 1992 to organise the Beli Orlovi unit.