The European Union will suspend most sanctions against Burma for a year while it assesses the country's progress towards democracy.
Officials said yesterday that while the decision would be formally taken by the EU's 27 foreign ministers when they meet in Luxembourg on Monday, it has already been agreed in principle.
The sanctions will be suspended for a year, with the possibility of a review in six months. The sanctions target more than 800 companies and nearly 500 people, and include the suspension of some development aid. The United States and Australia are expected to follow suit.
An embargo on arms and equipment that can be used for internal repression will remain in place, however. Burma, ruled by a military dictatorship for four decades, appears to be undergoing a remarkable transition. Last year, the junta ceded power to a new government that has embarked on reforms, including opening a dialogue with opposition leader Aung San Suu Kyi and allowing her to win a seat in parliament.
Ms Suu Kyi won a place in the lower house when the NLD won 43 of 45 available seats in a by-election on 1 April, thrashing President Thein Sein's ruling Union Solidarity and Development Party, which dominates parliament.
David Cameron visited Burma this month, becoming the first leader of a major Western country to visit the nation since the relaxation of military rule.
Baroness Ashton, the EU foreign policy chief, plans to travel to the country at the end of the month.