More than two million people have fled their homes in Darfur
A senior American official has said there is no evidence to support keeping Sudan on a list of countries that sponsor terrorism.
Sudan envoy Scott Gration also said the US would have to "unwind" sanctions imposed as a result of that status.
A Sudanese official welcomed what he called "positive signals" from the US.
The comments came amid a debate in the US about policy over Darfur, where the UN says some 300,000 people have died in the six years of conflict.
The US is also trying to assist Sudan in implementing a 2005 peace agreement that ended two decades of civil war between the north and south of the country.
Talking to the Senate Foreign Relations Committee, Mr Gration said the situation in Darfur had improved and that sanctions were now hindering reconstruction efforts for South Sudan, citing bans on road building and computer equipment.
The BBC's James Copnall in the Sudanese capital, Khartoum, says there have been signs that the previously dire relationship between the two countries has been improving recently.
Mr Gration said keeping Sudan on a terrorism blacklist was "a political decision," and there was no intelligence to support including Sudan as a sponsor of terrorism.
"There's significant difference between what happened in 2004 and 2003, which we characterized as a genocide, and what is happening today," he said.
"At some point, we're going to have to unwind some of these sanctions so we can do the very things we need to do."
Sudan's ambassador to the UN Abdul-Mahmoud Abdul-Halim was quoted by the state news agency Suna as saying his country "appreciated the positive signals".
He condemned US sanctions and called for a new relationship "based on respect of Sudan's choices" and in "the interest of the two nations".
Although the envoy's remarks are a powerful signal the US is considering softening its stance, strong lobbies in America are likely to argue against this, our correspondent says.
Advocacy groups blame the North Sudanese government for what they call a genocide in Darfur, a term Khartoum disputes strongly, he adds.
In addition American Christian groups, in particular, supported the Christian and animist South in the long civil war with the Muslim North.
As part of a North-South peace deal, in 2011 South Sudan is due to vote on whether it wants independence.
Mr Gration's comments came after a tour of Sudan, including visits to Khartoum, Darfur and the capital of the semi-autonomous South, Juba.