New Zealand, Australia and Fiji have agreed at a meeting of the three countries' foreign ministers to re-install high commissioners.
Australia and New Zealand expelled Fiji's envoys in November 2009, a day after Suva ordered out their high commissioners claiming interference in its judicial affairs.
Monday's trilateral meeting in Sydney involved interim Fiji foreign minister Ratu Inoke Kubuabola, New Zealand Foreign Minister Murray McCully and his Australian counterpart Bob Carr.
In a statement, the trio said they believed re-installing high commissioners in each country's capital will help ensure future communication between New Zealand, Australia and Fiji remains open and effective.
The meeting also allowed Mr Carr and Mr McCully to raise concerns about continuing curbs on media freedom and human rights.
Mr McCully says Fiji is making progress towards elections in 2014 and New Zealand will keep a careful eye on the public consultation being conducted by Fiji's Constitutional Commission.
"If members of the public are able to participate with freedom of speech, if the media are able to report the proceedings without restriction, if we're able to see people able to assemble without hindrance, those will be signs that we're headed towards elections that are reasonably free and fair."
Interim Fiji foreign minister Ratu Inoke re-stated his government's commitment to free, fair and inclusive elections.
All three ministers agreed to consider bringing in more flexible sanctions on a case by case basis.
They also reaffirmed each country would continue to work together to support Fiji's return to democracy.
Labour in favour
The Labour Party says easing travel bans and restoring diplomatic ties with Fiji might encourage a return to democracy in that country.
Labour leader David Shearer says the move might provide the impetus Fiji needs to go ahead with a democratic process in 2014.