Cuba on Monday was to open its Washington mission with a ceremony attended by hundreds of guests, while the US was to restore its former Havana mission, which has operated under the auspices of the Swiss Embassy, into a fully-fledged US embassy after midnight on Sunday.

Presidents Barack Obama and his Cuban counterpart Raul Castro exchanged letters last month agreeing to unfreeze ties on July 20, when the embassies could be reopened.

Obama - who was born the year the US embassy was closed, in 1961 - then hailed the deal as a "historic step forward" that would end a failed and archaic US policy of isolating the island.

Al Jazeera's Lucia Newman, reporting from Havana, described the decision as "a long-awaited game changer".

"This week's renewal of diplomatic relations does not erase political differences but psychologically it raises the curtain for most Cubans," she said.

Obama ordered a review of Cuba's status on America's state sponsors of terrorism list as part of a landmark policy shift in December when he and Castro announced they would work towards a broader normalisation of ties.

The announcement followed a half-century of enmity, a crippling economic embargo, CIA assassination plots and a Cuban missile crisis.

The presidents then met in April at the Summit of the Americas in Panama City in the first meeting between the countries' leaders in decades and announced a "turning point" towards warmer relations.

The United States formally dropped Cuba from a list of state sponsors of terrorism the following month, and has since announced moves to allow increased trade and travel between the countries.

Larry Luxner, the editor of the Washington Diplomat, said it was clear from recent developments in America's relationship with Iran and Cuba, that Obama wanted to leave a legacy of improved diplomatic ties.