The move is "a major step toward ending decades of Cold War enmity" as President Obama seeks to bolster his foreign policy legacy
The US and Cuba have agreed to restore diplomatic relations and reopen embassies in Washington and Havana.
It is "a major step toward ending decades of Cold War enmity", a US source said.
The countries have been discussing opening embassies since the historic December announcement that they would move to restore ties after a half-century of animosity that has included the failed Bay of Pigs invasion and the Missile Crisis.
For Barack Obama, ending the US freeze with Cuba is central to his foreign policy legacy as he nears the end of his presidency.
He believes in engaging directly with global foes and has argued that the trade embargo on the communist island just 90 miles south of Florida is ineffective.
Polls show a majority of Americans support Mr Obama's bid to improve ties.
The President could even visit Cuba before he leaves office in 2017, the White House has said.
Mr Obama met Raul Castro in April - the first sit-down between US and Cuba leaders since 1956.
Cuba was formally removed from the US list of state sponsors of terrorism in late May.
Travel and commutations restrictions have also been significantly eased.
But while the opening of embassies marks a major milestone, significant issues remain as the countries look to normalise relations.
These include discussions about human rights, demands for compensation for confiscated American properties in Havana and damages to Cuba from the embargo.
The trade embargo was put in place in 1962 - and there is fierce opposition to lifting it from Republicans.
Presidential hopeful Jeb Bush said the move to open a US embassy in Cuba was a bad idea.
"This 4 July, reports of a new US embassy in Havana will legitimise repression in Cuba, not promote the cause of freedom and democracy," he said.
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