Fiji's military strongman Voreqe Bainimarama said Monday he would lift emergency laws in place since a 2009 political crisis and begin discussions on a new constitution.
The draconian regulations, including including tight censorship on the news media and a ban on public meetings, were imposed after a Fiji court ruled that Bainimarama's 2006 coup was illegal.
During the crisis the constitution was repealed, the judiciary sacked and the police and military were given powers to detain people without charge.
But in his New Year message, Bainimarama said the emergency laws would be lifted on Saturday to pave the way for consultation on a new constitution.
"I will, over the next few weeks, announce the nationwide consultation process which will commence in February 2012," he said.
"To facilitate this consultation process the public emergency regulations will cease from January 7, 2012."
The move was immediately welcomed by New Zealand, one of the harshest critics of the Bainimarama-led military coup.
New Zealand Foreign Minister Murray McCully said Wellington has been calling for the lifting of the regulations as an important step towards the holding of free and fair elections in Fiji.
"We therefore welcome the announcement that the regulations are to be lifted and the announcement that public consultations will commence on a new constitution in February," McCully said.
"While there are a range of steps that will be required before free and fair elections can be held, these are important moves in the right direction.
"The international community will want to see these changes improve the lives and freedoms of ordinary Fijians."
Bainimarama said that even though the emergency regulations were being lifted, "public order, protecting the vulnerable and safeguarding the economy will always be paramount".
He did not specify whether the emergency laws would be replaced by any other decrees but said the Pacific island nation "can only achieve success if all of us take part in the modernising of Fiji and if we think nationally."
After failing to honour initial pledges for an early return to democracy, resulting in Fiji facing sanctions from many countries and suspension from the Commonwealth, Bainimarama has promised elections in 2014.
He said in his New Year speech that the new constitution must establish a democratic, elected government.
"The constitution must establish a government that is founded on... a truly democratic system based on the principal of one person, one vote, one value. We will not have a system that will classify Fijians based on ethnicity."
Bainimarama has argued that before his coup Fiji was beset by divisions between the majority indigenous population and the ethnic Indian minority.