The bloc in October suspended its asset freezes and travel ban sanctions against 170 individuals and three entities in Belarus, and foreign ministers and has now decided to make that decision permanent, the source said.
Four people not included in the October suspension because of their involvement in "unresolved disappearances" will remain blacklisted and a longstanding arms embargo will also stay in place for another 12 months.
At a regular meeting, the bloc's foreign ministers noted that Lukashenko had, as promised, released the last political prisoners he held -- a "long sought step," according to a draft statement seen by AFP.
EU diplomatic sources told AFP last week there were some misgivings about ending the sanctions but that on balance, most felt it was the best option to ensure dialogue with Lukashenko and support efforts to improve human rights in the former Soviet-ruled state.
The sources also said that the EU was mindful of the wider picture, notably Belarus' role in hosting a series of peace talks between Kiev and pro-Moscow rebels in eastern Ukraine.