HAVANA/WASHINGTON (REUTERS) - President Barack Obama was set to announce that the United States and Cuba are moving to normalise diplomatic relations more than 50 years after they were severed, the biggest US policy shift in decades of hostile ties with the island.
Obama was set to announce the changes in an announcement at 12pm (1700 GMT).
Previewing his announcement, US officials said the United States and Cuba would move to open embassies in each other's capitals.
Obama spoke on Tuesday to Cuban President Raul Castro to discuss the changes in a call that lasted nearly an hour. Castro was due to speak in Cuba at the same time as Obama.
The shift will mean a relaxation in the flow of commerce and transportation by the United States to Cuba, the officials said.
The two countries have been ideological foes since soon after the 1959 revolution that brought Raul Castro's older brother, Fidel Castro, to power. Washington and Havana have no diplomatic relations and the United States has maintained a trade embargo on Cuba for more than 50 years.
Washington's policy has survived the end of the Cold War as the United States pushes for democratic reform in Cuba.
As part of a prisoner swap under the new policy, Cuba freed American Alan Gross in exchange for three Cubans held by the United States, the officials said. Cuba is also releasing a US intelligence agent held for nearly 20 years.
"These steps will be the most significant changes to our Cuba policy in more than 50 years," a senior administration official told reporters of the measures to be announced by Obama.
"What we are doing is beginning the normalisation of relations between the United States and Cuba." The official said the United States and Cuba would initiate high-level contacts and visits with Cuba.
"We will be immediately initiating discussions with Cuba to reestablish diplomatic relations that have been severed since 1961," the official said.
One official said the policy was being changed because of a belief within the Obama administration that the longstanding US embargo against Cuba was not working. "If there is any US foreign policy that has passed its expiration date, it is the US Cuba policy," the official said.
The US official said Gross was released on humanitarian grounds and left Cuba on a US government plane bound for the United States. In addition to Gross, congressional sources said the prisoner exchange included Cuba's release of a CIA prisoner and the US release of three Cuban intelligence agents.
Cuba arrested Gross, now 65, on Dec 3, 2009, and later sentenced him to 15 years in prison for importing banned technology and trying to establish clandestine Internet service for Cuban Jews. Gross had been working as a subcontractor for the US Agency for International Development (USAID).
A congressional aide said that Gross would land at Andrews military base, near Washington DC, at noon.