China's ruling Communist Party has decided to abolish the country's one-child policy and allow all couples to have two children, the official Xinhua News Agency said.
It cited a communique issued by the ruling Communist Party on Thursday after a four-day meeting in Beijing to chart the course of the nation over the next five years.
China is "abandoning its decades-long one-child policy", Xinhua reported.
The restriction was introduced in 1980 as a way to curb the population and limit demands for water and other resources.
Roderic Wye, associate fellow at Chatham House's Asia Programme, told Al Jazeera: "The importance is not so much democratic, but in the lifting of a highly restricted and coercive policy.
"It's going to be 20 years before it has a significant impact on the working population."
The controversial policy restricted most couples to only a single offspring, and for years authorities argued that it was a key contributor to China's economic boom.
But after years of strict, sometimes brutal enforcement by a dedicated government commission, China's population - the world's largest - is now ageing rapidly, gender imbalances are severe, and its workforce is shrinking.
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The concerns led to limited reforms in 2013, including allowing a second child for some couples in urban areas, but relatively few have taken up the opportunity.
Al Jazeera's Rob McBride, reporting from Beijing, said the one-child policy was no longer viable for the country.
"China needs more people joining the workforce, so there is the economic aspect looking further ahead that China needs to have larger families.
"This was one of the widely anticipated measures that was expected from the five-year plan and I think it will be broadly welcomed. The one-child policy is an unpopular measure here in China. We have seen children growing up in isolation because of it," our correspondent said.
Source: Al Jazeera and agencies