US Ambassador Frankie Reed said that in recognition of Fiji's return to democracy, Washington was lifting restrictions on financial assistance and visas, as well as exploring fresh engagement with the country's military.
"We congratulate the people of Fiji on the swearing-in of a new government and the restoration of the country's parliament," she said in a statement.
Australian Foreign Minister Julie Bishop said she was committed to "normalising" relations between Canberra and Suva, which were frequently strained after military strongman Voreqe Bainimarama staged a bloodless coup in 2006.
"My visit demonstrates the Australian government's commitment to taking our relationship with Fiji into a new era of partnership and prosperity."
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Australia's sanctions mainly consisted of visa restrictions on the regime of Bainimarama, who has successfully re-invented himself as a civilian leader and won by a landslide in elections held on September 17.
Bishop also announced aid for Fiji's public service and tourism industry, as well as inviting the country to join a scheme that allows Pacific islanders into Australia for employment as seasonal farm workers.
Fiji's military is a major source of troops for UN peacekeeping operations but there have been questions over the quality of their training because they have been unable to work with their Australian, US and New Zealand counterparts since 2006.
The joint statement also said Australia's High Commissioner Margaret Twomey would begin her duties in Suva soon and Fiji would send an envoy to Canberra.
Australia first nominated Twomey for the role in 2012 but the appointment stalled when Fiji refused to grant her a visa.