Ivory Coast's opposition leader has welcomed the decision to let him contest elections due in October.
Alassane Ouattara says many Ivorians hold dual nationality
Alassane Ouattara, a former prime minister, has been excluded from recent polls because he has family ties to neighbouring Burkina Faso.
Rebels who control the north, where Mr Ouattara is popular, have insisted that he be allowed to stand.
Peace broker and South African leader Thabo Mbeki has also hailed the u-turn by President Laurent Gbagbo.
Ivory Coast has been divided in two since September 2002 but a recent South African-backed peace deal has raised hopes of an end to the conflict.
"I am pleased that this first step in democracy has been recognised. If my party wishes - certainly I would contest elections," Mr Ouattara told the BBC's Focus on Africa programme.
Earlier, a spokesman for his RDR party said the decision to let him stand would "open the way to peace for our country".
His exclusion had become a symbol of the marginalisation felt by northerners and Muslims.
But he accused Mr Gbagbo of trying to ensure that northerners were not allowed to vote in the polls.
He admitted that he had held a Burkina Faso passport in the past but said many Ivorians held dual nationality.
"How can a former prime minister be considered a foreigner?" he asked, saying nationality was a "non-issue".
South African leader Thabo Mbeki welcomed the move as a breakthrough.
"That's a very important announcement because it means that the people of Ivory Coast are moving towards peace, they are moving towards democracy," Mr Mbeki told a rally in the South African city of Durban.
President Gbagbo announced on Tuesday in accordance with a peace deal signed in Pretoria on 6 April, he would take "exceptional measures" to suspend normal rules for the forthcoming poll only.
"As a consequence, Mr Alassane Dramane Ouattara can, if he wants, present his candidature in the presidential elections of October 2005," he said.
The issue had been one of the reasons for a long deadlock in efforts to bring peace to Ivory Coast.
Laurent Gbagbo became president after disputed polls in 2000
Mr Gbagbo had insisted that he could not allow the Ivorian constitution - and its requirement for presidential candidates to have two Ivorian parents - to be changed without a referendum.
Fighting erupted between Mr Ouattara's mainly Muslim followers from the north and mostly southern Christian supporters of Mr Gbagbo after Mr Gbagbo was proclaimed president in 2000.
He was believed to have won the vote, but military ruler Robert Guei declared himself victor.
A popular uprising later forced General Guei to flee the country.
Rebels took control of the northern part of Ivory Coast in an uprising beginning in September 2002.
Though a ceasefire was signed in January 2003 violence continued - prompting the African Union to ask Mr Mbeki to launch a fresh peace effort.