Pro-government and opposition factions had reached a deal to revoke the two decisions after an Arab League delegation met both sides in Beirut on Wednesday.
The cabinet said it endorsed the deal to respect the League's mediation efforts to end Lebanon's 18-month-old political crisis.
Al Jazeera's James Bays, reporting from the streets of Beirut, said the immediate crisis appeared to be over, with the opposition saying it would lift roadblocks, particularly on the crucial road to the airport.
It has also pledged to end its civil disobedience.
Shifting power balance
But he said Wednesday's climbdown by the government also indicated that the balance of power in Lebanon had shifted.
The opposition had showed its military strength and that would not soon be forgotten.
Hezbollah and its allies last week routed government supporters and briefly seized control of large parts of Beirut, before handing them over to the army.
The Lebanese army continued to patrol throughout the country on Wednesday with orders to use force to restore security if necessary, security officials said.
A decision by the government to ban Hezbollah's private communications network and a move to fire Beirut airport's security chief, who is close to the group, sparked the violence last week, the worst in Lebanon since the 1975-90 civil war.
Six days of fighting left at least 65 people dead and about 200 people wounded.
Opposition fighters pulled back after the army reversed the government decisions.
Senior US security officials said Washington plans to intensify its pressure on Syria and Iran over their alleged support for Hezbollah's moves against the Lebanese government.
George Bush, the US president, who arrived in Israel on Wednesday, warned Iran and Syria on the eve of his trip that world powers would not allow Lebanon to fall under foreign domination and vowed to shore up the Lebanese military.
Washington also said it was expecting the UN Security Council to take action next week over the unrest.