However, the government previously contested the resumption of fuel and said that the levels soon to be shipped into Gaza are "the minimum required in order to meet the basic humanitarian needs of the strip's civilian population".
People in Gaza have suffered shortages of power, fuel and basic goods.
Al Jazeera's David Chater, reporting from Jerusalem, said the decision means that the immense pressure placed on the Palestinians in Gaza will be reduced.
He said: "This will also have an effect on the developments in the Rafah crossing."
The decision to resume fuel supplies comes on the same day as Mahmoud Abbas, the Palestinian president, and Ehud Olmert, the Israeli prime minster, hold talks over the Gaza border breach, as well as stalled peace talks.Egyptian resolve
Egypt says it will take measures to regain control of its border with the Gaza Strip which was breached by residents for the first time last Tuesday as they sought basic supplies.
Ahmed Abul Gheit, the foreign minister, said: "Egypt will take all the appropriate measures to control the Egyptian border with the Gaza Strip as soon as possible.
"There is an Egyptian desire to control the border and to control the flow of Palestinians in and out of the Gaza Strip."
Driven to desperation by the blockade, Gazans, helped by Hamas fighters, punched holes in the Gaza-Egyptian border at the Rafah crossing and flooded into Egypt to shop for essential commodities.
Egypt is under pressure to seal the border, but is reluctant to be seen as shoring up Israel's blockade.
Al Jazeera's Jacky Rowland reporting from the Gaza side of the Rafah crossing, said that the Egyptian government is using economic means to restrict the flow of Palestinians across the border.
She said: "Shops in Rafah, as well as in the town of El-Arish, 50km from Rafah, have been ordered to close for business.
"However, as we have seen for the past few days, the sense of freedom felt by the Palestinians is something they will not easily give up."
Egyptian forces are reportedly moving to close the border by stopping vehicles and further tightening their security cordon around the town of Rafah.
Security guards blocked one of the gaps carved into the border wall with piles of sand and border police were stopping cars with Palestinian number plates from entering Egypt and Egyptians cars from crossing into Gaza.
Pedestrians, however, continued to move back and forth freely.
Abul Gheit said that the government's patience with the situation was running out, following the wounding of dozens of members of the Egyptian security forces. He also condemned what he called Palestinian "provocations".
Egyptian border guards were now authorised to return fire if attacked, according to a security official.
Both Hamas and Fatah have accepted invitations to hold separate talks with the Egyptian government to discuss the situation.
Abbas has agreed to meet Hosni Mubarak, the Egyptian president, to discuss the crisis, his aide said late on Saturday.
The pair will meet on Wednesday, but Abbas has already said that he plans to retake control of the crossing and will urge the Israeli prime minister to accept his proposal at a planned meeting on Sunday.
Security forces loyal to Abbas were forced to leave the crossing when Hamas took control of the territory in June.