In a written statement, Rice added that the United States intends to remove Libya from the list of designated state sponsors of terrorism. Libya also will be omitted from the annual certification of countries not cooperating fully with U.S. anti-terrorism efforts.

"We are taking these actions in recognition of Libya's continued commitment to its renunciation of terrorism and the excellent cooperation Libya has provided to the United States and other members of the international community in response to common global threats faced by the civilized world since September 11, 2001," Rice said in her statement.

"Today's announcements are tangible results that flow from the historic decisions taken by Libya's leadership in 2003 to renounce terrorism and to abandon its weapons of mass destruction programs. As a direct result of those decisions we have witnessed the beginning of that country's re-emergence into the mainstream of the international community."

Just as 2003 marked a turning point for the Libyan people, Rice noted, so too could 2006 mark turning points for the peoples of Iran and North Korea.

"Libya is an important model as nations around the world press for changes in behavior by the Iranian and North Korean regimes -- changes that could be vital to international peace and security," Rice said. "We urge the leadership of Iran and North Korea to make similar strategic decisions that would benefit their citizens."

Re-establishing diplomatic relations with Libya, Rice said, opens the door to better discussion on other issues of importance, including protection of universal human rights, promotion of freedom of speech and expression, and expansion of economic and political reform consistent with President Bush's freedom agenda.

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Full Text of Secretary Rice's Statement