The White House made the formal announcement during presidential spokesman Robert Gibbs' daily briefing with reporters -- in both English and Spanish.
"The president would like to see greater freedom for the Cuban people. There are actions that he can and has taken today to open up the flow of information to provide some important steps to help that," Gibbs said.
Under the new policy, Cuban Americans will be allowed unlimited visits to family members on the island, as well as an unlimited flow of remittances, or cash many immigrants send home to their extended families. About 1.5 million Americans have relatives in Cuba, according to the Associated Press.
The administration will also allow U.S. telecommunications networks to link the United States and Cuba in order to improve the flow of information. Humanitarian items, such as clothing and personal hygiene items, will also be allowed, according to news reports.
Mr. Obama had promised to take such steps as a presidential candidate and a policy move had been expected this week. The decision comes after the president signed a bill last month easing economic restrictions on the Communist country.
Specifically, Mr. Obama directed the Departments of State, Treasury, and Commerce to make the following changes, according to a White House press release:
-- Lift all restrictions on travel of family members to Cuba
-- Remove restrictions on remittances to family members in Cuba
-- Allow U.S. companies to establish improved communications between the United States and Cuba, including through fiber-optic cable and satellite telecommunications facilities linking the two countries
-- Permit U.S. satellite radio and television companies to provide services to customers in Cuba
-- Add certain humanitarian items, such as clothing, seeds, fishing equipment, and veterinary medicines, to the list of goods available for export to Cuba
"There are no better ambassadors for freedom than Cuban Americans," then-candidate Obama said in a campaign speech last May in Miami. "It's time to let Cuban Americans see their mothers and fathers, their sisters and brothers. It's time to let Cuban American money make their families less dependent upon the Castro regime."
The decision does not lift a trade embargo with Cuba. It will still be illegal to send items to senior government officials and Communist Party members. "These steps are being taken in support of the Cuban people's desire to freely determine their own future and to open up the space needed to see democratic progress in Cuba," a White House official told ABC News.
The announcement comes several days before President Obama travels to Mexico City and later attends to the Summit of the Americas, beginning Friday, in Trinidad and Tobago. The summit, a gathering of 34 heads of government, always excludes Cuba, but Mr. Obama is expected to tell leaders that he wants to improve relations with Havana. But Cuban leader Raul Castro must first take steps toward democracy and free elections, President Obama is expected to say, before the United States will be willing to grant the island nation full diplomatic and economic relations.