The United States and Cuba have reached a deal to reopen embassies in Washington and Havana, a US source has said, in a major step toward ending decades of Cold War enmity.

"We will formally announce tomorrow that the United States and Cuba have reached an agreement to re-establish formal diplomatic relations and open embassies in each other’s capitals," the source said on Monday.

President Barack Obama is expected to publicly speak about the deal, which constitutes one of the major foreign policy achievements of his presidency.

Diplomatic ties have been frozen for five decades.

From the Bay of Pigs invasion to the Cuban Missile Crisis, antagonism across the narrow Straits of Florida often threatened to turn the Cold War hot.

But after 18 months of secret negotiations by aides, Obama and Cuban President Raul Castro agreed in December to restore relations.

The pair held a historic first meeting in Panama in April.

In May, the United States paved the way of rapprochement by taking Cuba off the list of state sponsors of terrorism.

Havana had vehemently protested its 1982 inclusion on the blacklist, which hampered its access to global markets.

Polls show a majority of Americans support Obama’s efforts to improve ties.

But the island is still subject to a US trade embargo put in place in 1962, which Obama has called on Congress to lift.

There is fierce opposition to lifting the embargo from Republican lawmakers.

In the meantime, other vestiges of ideological animosity are rapidly receding into history.

Travel and communications restrictions between the two countries have been eased.

An American orchestra has toured Cuba for the first time in decades, and Airbnb has even established a foothold on the Communist-ruled Caribbean Island.

The White House has said that a presidential visit is possible before Obama leaves office in 2017.