Foreign Affairs Minister Bob Carr says Australia will lift its remaining sanctions against Burma to encourage further democratic reforms, and will double aid to the country.
Senator Carr, who is visiting Burma, made the announcement after meeting president Thein Sein.
"This country needs investment that benefits the people, responsible investment," he said.
Earlier, Mr Carr spoke with democracy icon Aung San Suu Kyi. He invited her to visit Australia, and she accepted.
"I was brought up on songs like 'Kookaburra sat in the old gum tree' so I feel like I know a lot about Australia already," Ms Suu Kyi told reporters in Rangoon.
Last week, she left Burma for the first time, visiting Thailand and is expected to travel to Europe and the UK later in the year.
Ms Suu Kyi said over the years sanctions on Burma had helped pave the way for reform.
Kept under house arrest for nearly twenty years, Suu Kyi has just completed her first overseas trip since being released.
On it she warned investors against reckless optimism - comments which reportedly annoyed the military backed government.
"I didn't say i was against optimism, was against reckless optimism…(I see) no reason for friction," she said today.
