The federal government has welcomed the release of hundreds of political prisoners in Burma, saying the country's military-backed regime has made an important step towards democracy.
The south-east Asian nation's rulers have pardoned prominent dissidents, journalists and a former premier under a major prisoner amnesty, building on a series of reforms undertaken in the past year.
Foreign Affairs Minister Kevin Rudd says the release of prisoners is a "very important" step towards democracy in Burma.
"President Thein Sein and the Burmese government deserve recognition for taking this important decision," Mr Rudd said in a statement on Saturday.
He said the Australian government would reform its targeted sanctions on Burmese citizens following the release of more political prisoners.
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Mr Rudd said the Australian government also supported the announcement by Opposition Leader Aung Sung Suu Kyi and her party, the National League for Democracy, that they would contest by-elections on April 1.
Ms Sung Suu Kyi, a Nobel Peace prize winner and long-time political prisoner, has said she would contest for a seat in suburban Rangoon.
Her party boycotted the November 2010 elections in Burma.
The foreign minister said the ceasefire agreement between the Burmese government and the Karen National Union, a major ethnic rebel group, was to be welcomed.
"We recognise the vital importance of ethic issues in Burma and urge both the Burmese authorities and ethnic groups to honour all ceasefires and to work in good faith to resolve conflicts peacefully," he said.
