European football's governing body said that matches could only be played around Tel Aviv and they would need security guarantees before the games go ahead. The ban would be reimposed if the security situation deteriorates.
The decision takes effect immediately meaning that the UEFA Cup meeting between Hapoel Tel Aviv and Chornomorets Odessa on September 28 will be played at home.
"Going back to normality is of course an advantage for everyone," William Gaillard, the UEFA spokesman, said. "We asked our security and stadium people to review the decision and ... they decided the games can resume in the Tel Aviv area under certain conditions".
The ban, which was imposed on August 7, meant that all games under UEFA's jurisdiction had to be played at neutral venues in European countries. Internationals as well matches in European club competitions were affected meaning Israel had to play last week's Euro 2008 qualifier against Andorra in the Netherlands.
The first international match after the lifting of the ban will be the under-21 fixture against France on October 11.
Moshe Sinai, the national team's assistant coach, said the players would get a boost from playing in front of a home crowd again.
"Nothing makes me happier than returning home," Sinai said. "This piece of news gives all of us a lot of motivation, as here is our most comfortable place to play".
Maccabi Haifa's home match in the Champions League qualifying round was the first game to be moved after Haifa suffered heavy rocket attacks from Hezbollah. The game was played in the Ukraine capital Kiev where they drew 1-1 with Liverpool but dropped out of the tournament as they lost 3-2 on aggregate. They played their first UEFA cup game against Litex Lovetch in Nijmegen in the Netherlands.
Bnei Yehuda and Beitar Jerusalem were forced to host UEFA Cup matches in Sofia, Bulgaria, and Hapoel Tel Aviv had to play in Tilburg, the Netherlands.