The West African regional grouping Ecowas says it is lifting sanctions against Togo with immediate effect.
The move follows the announcement by Togolese leader Faure Gnassingbe that he is stepping down after increasing international pressure.
Mr Faure was installed three weeks ago as president by the military, immediately after the death of his father, Gnassingbe Eyadema.
He will be replaced on an acting basis by parliament speaker Abass Bonfoh.
Faure Gnassingbe said he wanted to ensure the transparency of the election now due in April, in which he plans to stand as a candidate.
The UN Secretary General, Kofi Annan, also welcomed Mr Faure's decision.
'Borrowed robes'
A spokeswoman for Nigerian President Olesegun Obasanjo, who chairs the African Union, described Mr Faure's decision as a "victory for democracy".
"What happened in Togo was a coup d'etat dressed in the borrowed robes of democracy and we are glad that Faure Gnassingbe has finally realised the folly of what happened," Remi Oyo said, quoted by AFP news agency.
"For so long Africa has had a bad image - this is eloquent testimony that Africa can create solutions to its own problems"
"For so long Africa has had a bad image. This is eloquent testimony that Africa can create solutions to its own problems," she added.
The UN and African Union imposed sanctions on Togo after Mr Faure was installed as president by the army hours after the death of his father earlier this month.
Although he promised elections within 60 days, as stipulated by the constitution, this did little to quell protests from African neighbours and beyond.
Constitutional amendments swiftly introduced to legitimise Mr Faure's appointment have since been partly reversed.
Late on Friday, the country's ruling party nominated Mr Faure as its new candidate for the presidential election.
Earlier this week, he visited Gabon and then Libya, for a meeting with President Muammar Gaddafi.
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