People wait for passengers to arrive at the airport in Havana January 15, 2015. [Photo/Agencies]

In addition, there will be a change in the definition of "cash in advance" payment required by Cuban buyers, which could help a variety of business interests, most notably US agriculture, in gaining greater access to Cuban markets.

The announcement was made after the Obama administration said on Monday that Castro's government had fulfilled its promise to free 53 political prisoners as agreed with the US government. It also comes a week before high-level US-Cuba talks in Havana aimed at starting to normalize ties.

'SIGNIFICANT STEP'

Obama's spokesman, Josh Earnest, called the steps a "significant step" in delivering on Obama's new direction on Cuba. In announcing the shift in December, the president said that decades of trying to force change in Cuba by isolating the island had not worked.

"We firmly believe that allowing increased travel, commerce, and the flow of information to and from Cuba will allow the United States to better advance our interests and improve the lives of ordinary Cubans," he said.

But Republican Senator Marco Rubio, a Cuban-American and forceful critic of the policy shift, said it would hurt ordinary Cubans.

"This is a windfall for the Castro regime that will be used to fund its repression against Cubans, as well as its activities against US national interests in Latin America and beyond," he said in a statement.

While Obama is using executive powers to poke holes in trade barriers with Cuba, only Congress can lift the longstanding embargo. With Republicans controlling the Senate and the House, there is little chance of that happening any time soon.

US Assistant Secretary of State Roberta Jacobson will hold high-level negotiations in Havana on Jan. 21-22 aimed at starting the normalization process. The discussions will include efforts to reopen embassies in both countries.