On his way home ... jailed American Alan Gross has been freed from Cuba. Picture: AP Source: AP

The announcement comes amid a series of new confidence-building measures between the longtime foes, including the release of American Alan Gross after five year and the freeing of three Cubans jailed in the US.

President Barack Obama was to announce the policy changes from the White House overnight.

In happier times ... Alan Gross with his wife Judy Gross before he was detained in Cuba. Picture: AP Photo/Gross Family Source: AP

US Senator Marco Rubio, a Republican from Florida, said the US and Cuba were moving toward normalised banking and trade ties.

The US was poised to open an embassy in Havana in the coming months, he said.

“This is going to do absolutely nothing to further human rights and democracy in Cuba,” Mr Rubio said in an interview.

“But it potentially goes a long way in providing the economic lift that the Castro regime needs to become permanent fixtures in Cuba for generations to come.”

Mr Gross, 65, was on an American government plane bound for the US after being released on humanitarian grounds by the Cuban government at the request of the Obama administration.

As part of the secret negotiations to secure his release, the US is releasing three Cubans jailed in Florida for spying.

Obama administration officials have considered Gross’ imprisonment an impediment to improving relations with Cuba.

Cuba was also releasing a non-American intelligence ‘asset’ along with Gross, according to a US official. That official and others spoke on the condition of anonymity because they were not authorised to be identified by name before Mr Obama’s remarks.

Protests ... supporters call on US President Barack Obama to help free Alan Gross during a rally in Lafayette Park, Washington DC, on December 3. Picture: AFP Source: AFP

Bonnie Rubinstein, Gross’ sister, heard the news from a cousin, who saw it on television.

“We’re like screaming and jumping up and down,” she said in a brief telephone interview from her home in Texas.

Mr Gross was detained in December 2009 while working to set up internet access as a subcontractor for the U.S. government’s U.S. Agency for International Development, which does work promoting democracy in the communist country.

It was his fifth trip to Cuba to work with Jewish communities on setting up internet access that bypassed local censorship.

Cuba considers USAID’s programs illegal attempts by the US to undermine its government, and Mr Gross was tried and sentenced to 15 years in prison.

The three Cubans released in exchange for Gross are part of the so-called Cuban Five — a group of men who were part of the “Wasp Network” sent by Cuba’s then-President Fidel Castro to spy in South Florida.

The men, who are hailed as heroes in Cuba, were convicted in 2001 in Miami on charges including conspiracy and failure to register as foreign agents in the US.

Two of the Cuban Five were previously released after finishing their sentences.

Life sentence ... one of the Cuban Five, Gerardo Hernandez (pictured), is serving a life prison sentence for murder conspiracy in the 1996 killings. Picture: AP Source: AP

In a statement marking the fifth anniversary of Gross’ detention earlier this month, Mr Obama hinted that his release could lead to a thaw in relations with Cuba.

“The Cuban Government’s release of Alan on humanitarian grounds would remove an impediment to more constructive relations between the United States and Cuba,” Mr Obama said in a statement.

Mr Gross’ family has said he is in ailing health.

His wife, Judy, said in a statement earlier this month that Mr Gross has lost more than 100 pounds (45 kilograms), can barely walk due to chronic pain, and has lost five teeth and much of the sight in his right eye.

He has begun refusing to see his wife and daughter, the new chief of the US Interests Section in Havana and members of Cuba’s small Jewish community, who had been visiting him on religious holidays.

Mr Obama has taken some steps to ease US restrictions on Cuba after Raul Castro took over as president in 2010 from his ailing brother.

He has sought to ease travel and financial restrictions on Americans with family in Cuba, but has resisted calls to drop the embargo.

Mr Obama and Raul Castro shook hands and exchanged pleasantries last year while both attended a memorial service in South Africa for Nelson Mandela.

The surprise prisoner swap has echoes of the deal the US cut earlier this year to secure the release of Army Sgt. Bowe Bergdahl, who had been held by the Taliban.

In exchange for his release in May, the US turned over five Taliban prisoners held at the Guantánamo Bay detention centre.