US President Barack Obama has said that Washington agreed to re-establish diplomatic relations with Cuba and will raise its flag over a US Embassy in Havana later this summer.

"This is a historic step forward in our efforts to normalise relations with the Cuban government and people and begin a new chapter with our neighbours in the Americas," Obama said in a statement delivered in the White House Rose Garden.

"A year ago it might have seemed impossible that the United States would be once again raising our flag, the Stars and Stripes, over an embassy in Havana."

He made a point of saying Washington would not shy away from highlighting continuing disagreements over human rights and other issues.

"We will also continue to have some very serious differences," he said.

"That will include America's enduring support for universal values like freedom of speech and assembly, and the ability to access information. And we will not hesitate to speak out when we see actions that contradict those values."

The president had campaigned for the White House in 2008 on a foreign policy platform of reaching out to US foes.

"With this change, we will be able to substantially increase our contacts with the Cuban people," he said.

"We will have more personnel at our embassy and our diplomats will have the ability to engage more broadly across the island."

Cuba's demand

Meanwhile, the Cuban government issued a statement on Wednesday asking the US to stop its radio and TV broadcasts into the country, end "subversive" programmes there and return the US military base in Guantanamo to Cuba.

Obama, who is focused increasingly on his legacy as his term in office winds down, noted the popularity of the change among Americans eager to travel to the island and among Cubans eager to have closer ties. He urged Congress to heed those feelings when considering the embargo lift.

Ahead of Obama's remarks, Washington delivered a letter from the White House to Cuba about restoring embassies in the countries' respective capitals on Wednesday.

While the opening of embassies marks a major milestone in the thaw between the US and Cuba, significant issues remain as the countries look to normalise relations.

Among them: talks on human rights; demands for compensation for confiscated American properties in Havana and damages to Cuba from the embargo; and possible cooperation on law enforcement, including the touchy topic of US fugitives sheltering in Havana.

Source: Agencies