Turkey and Greece have agreed to cancel military exercises they were planning separately in the Mediterranean.
The Greek navy will have to give up its Toksodis exercises
Greek Foreign Minister George Papandreou said the move was aimed at securing stability in the region.
The two countries have a long-running dispute over Cyprus, an island divided since a Turkish invasion in 1974.
Greece and Turkey also postponed military exercises in 2001 and 2002 when the United Nations presented a plan aimed at reunifying Cyprus.
Correspondents say that relations between Turkey and Greece appear to have warmed recently, despite the collapse of the UN peace plan.
'Sign of improvement'
Speaking at a meeting with his Turkish counterpart Abdullah Gul in the southern city of Antalya, Mr Papandreou said the decision had been made in the spirit of the Olympic Games, to be held in Athens in August next year.
"We see this as a sign of the improvement in ties between our countries," Mr Gul said.
Greece and Turkey had been planning naval exercises in the eastern Mediterranean.
They will also give up manoeuvres held jointly with the Greek and Turkish Cypriot communities, known as Nikiforos and Toros.
Correspondents say the division of Cyprus could continue to be a stumbling block for Turkey's aspirations to start talks on accession to the EU.
Cyprus itself is set to join the EU in May 2004, but unless a settlement is reached between the two communities membership will in effect apply only on the Greek side.