US president Barack Obama has lifted restrictions on family ties to Cuba which had been imposed as part of the embargo against the country.
He will also allow US telecommunications firms to start providing service for Cubans.
In a major shift from the Bush administration's more hard-line approach to Havana, Mr Obama ended limits on family travel and money transfers by Cuban Americans in the United States to Cuba.
The decisions unveiled by the White House do not eliminate Washington's trade embargo against Cuba set up 47 years ago, but it does hold out the prospect for improving relations between the two countries.
"The president has directed that a series of steps be taken to reach out to the Cuban people to support their desire to enjoy basic human rights," White House spokesman Robert Gibbs told reporters. "These are actions he has taken to open up the flow of information."
Administration officials said Mr Obama hoped the new measures would encourage Cuba's one-party state to implement democratic reforms long demanded by Washington as a condition for removing sanctions imposed after Fidel Castro took power in 1959.
Shares of companies that stand to gain from a thaw in US ties with Cuba soared on the news, led by Canadian mining and energy company Sherritt International, a major player in Cuba's nickel and oil industry, whose stock rose 24.5 per cent.
US telecommunications companies will now be allowed to set up fibre-optic cable and satellite links with Cuba, start roaming service agreements and permit US residents to pay for telecoms, satellite radio and satellite television services provided to individuals in Cuba, the White House said.
Miami-based cruise operator Royal Caribbean also saw its shares rise on hopes that it and rival firm Carnival could sail to Cuba just 150 kilometres from the US.
Mr Obama also directed his government to look at starting regularly scheduled commercial flights to Cuba. Air travel between the United States and Cuba is limited to charter flights at present.
While they insistently call for an end to the US embargo, Cuba's leaders have in the past reacted with caution and suspicion to initiatives presented by Washington as seeking to "open up" Cuba's political system.
Havana rejects arguments that it needs Western-style democracy and has resisted as "subversive" past US efforts to channel funds and communications equipment to dissidents and independent journalists on the island.
Supporters of easing US sanctions against Cuba hailed the family-related policy changes, which will affect an estimated 1.5 million Americans who have relatives in Cuba.
They voiced hope it would lead to even bolder steps by Mr Obama to dismantle the trade embargo, which critics argue is an obsolete policy that has failed to foster change in Cuba despite being maintained by successive US administrations.
But conservative critics of Mr Obama's strategy said it would provide an increased cash flow to help prop up Cuba's communist government.
Mr Obama had promised in the presidential campaign to allow Cuban Americans to travel more freely to Cuba and increase financial help to family members, but insisted he would not end the trade embargo until Cuba showed progress toward democracy.
Mr Obama's gesture appeared intended to signal a new attitude toward both Cuba and other Latin American countries that have pressed Washington to end a trade embargo that has sought to isolate Havana for more than four decades.
It also comes ahead of Mr Obama's attendance at a Summit of the Americas in Trinidad later this week.
Reuters