Roads leading to Beirut's airport are now expected to be reopened
The Lebanese government has cancelled measures against the Shia movement Hezbollah, that triggered six days of clashes between political factions.
The measures, taken last week, included outlawing Hezbollah's phone network, and sacking an airport security chief with alleged links to the group.
Hezbollah's leader, Hassan Nasrallah, had described the measures as a declaration of war.
The government move comes as an Arab League delegation attempts to mediate.
Lebanon's information minister Ghazi Aridi said the government was revoking the measures "in view of the higher national interest".
At least 60 people were killed in the fighting between partisans of the western-backed government and the opposition, which is supported by Syria and Iran.
After the announcement, celebratory gunfire was heard in the southern suburbs of Beirut and other Shia-dominated areas.
The BBC's Jim Muir in Beirut says this is a humiliating climb-down by the Western-backed government.
Lifting the barricades
An Arab League delegation is in Lebanon to mediate between the supporters and opponents of the government.
The delegation, which includes eight foreign ministers led by Qatar's prime minister, is holding separate talks with the two sides.
Following the government's decision, the opposition, led by Hezbollah, is expected to remove the barricades blocking key roads, including the ones leading to Beirut's international airport, which has been closed for a week.
Both sides are also expected to enter immediate dialogue on three outstanding issues - the election of a new president, the formation of a national unity government, and the reform of election law.
But our correspondent in Beirut says many Lebanese remain fearful that trouble could break out again at any moment if a solid political accommodation is not reached.