The US and Cuba plan to launch efforts to normalize diplomatic and economic relations following more than half a century of hostility, US President Barack Obama said on Wednesday.

The surprise announcement came after a phone call between Obama and Cuban President Raul Castro that lasted 45 minutes and followed the release of US prisoner Alan Gross by Cuba and three Cubans jailed in Florida for spying.

"The Cuban Government's release of Alan on humanitarian grounds would remove an impediment to more constructive relations between the United States and Cuba," Obama said in a statement.

Obama said Pope Francis had played an active role in pressing for the release of Gross, who had been imprisoned in Cuba for five years.

"Today America chooses to cut loose the shackles of the past," Obama said, hailing the move as a "new chapter" in US-Cuba relations.

“Neither the American nor Cuban people are well served by a rigid policy that’s rooted in events that took place before most of us were born.”

Raul Castro welcomed the policy shift in a separate address aired on Cuban TV.

In addition to looking to open an embassy in Havana in the coming months, the US also plans to ease a travel ban for US citizens.

The normalization measures, which Obama described as the "most significant changes in US policy towards Cuba in 50 years", also include relaxation of financial restrictions, efforts to lift the trade embargo and bolstering telecommunication links between the two countries.

Reviewing the designation of Cuba as a state sponsoring terrorism is also on the list of planned steps.

Castro said Cuba had long been pressing for normalization of relations.

"Ever since my election... I have reiterated on many occasions our preparedness to hold a respectful dialogue with the government of the United States based on sovereign equality," Castro said.

The US and Cuba have maintained no diplomatic relations since 1961, two years after the Cuban revolution of 1959 brought  to power Raul Castro’s elder brother, Fidel Castro. A ban on US trade links with Cuba has been in force for more than 50 years.