The United States has formally dropped Cuba from its list of state sponsors of terrorism.

The change in status will now allow greater interaction between the countries, although the trade embargo remains, with Congress the only entity free to end it.

President Barack Obama made a historic move in December when he made moves to normalise relations between the nations, which had been engaged in various forms of hostility for 54 years.

Officials from the country continue to work on restoring full diplomatic relations, including the opening of embassies and return of ambassadors in Washington and Havana, the Associated Press reports.