New Zealand navy ships will now be allowed entry into military ports in the United States.
The lifting of the 26-year-old ban marks a significant development in relations between New Zealand and the United States.
US Secretary of Defense Leon Panetta and his New Zealand counterpart Jonathan Coleman have been having talks at Government House in Auckland this afternoon.
The change in policy, part of an effort to bolster security ties between the two countries, will "allow the US Secretary of Defense to authorise individual visits to Department of Defense or Coast Guard facilities in the United States and around the world," Panetta said.
Coleman called the visit "very significant" and that it "underscores the very warm relationship between our two countries."
He said the future ahead for co-operation between the United States and New Zealand was "very very good."
TV ONE will feature the only New Zealand interview with Secretary Panetta on Q+A this Sunday at 9am.
In another development today, military discussions can now also be formally held between the two nations.
Panetta added that the United States would lift restrictions on US-New Zealand exercises and bureaucratic obstacles to talks between defence officials of both countries.
"These changes make it easier for our militaries to engage in discussions on security issues and to hold co-operative engagements that increase our capacity to tackle common challenges," he said.
"The purpose of this trip, is really to mark a new era of deepening defence co-operation between our two countries."
However neither side will change their stance on US nuclear ship visits to New Zealand.
Work in Afghanistan acknowledged
Afghanistan has also been high on the agenda during talks.
Panetta said he has a profound respect for New Zealand's contribution in Afghanistan and acknowledged recent attacks on Kiwi soldiers.
"They are heroes who gave their lives for their country and a cause greater than themselves," he said of our soldiers.
He said he knows the progress made in the war-torn country has come at a high price for New Zealand.
"We will do whatever we have to do, in co-operation with the forces of New Zealand to make sure that they understand that nobody attacks our forces and gets away with it."
This week marked a milestone for the United States in Afghanistan.
Nearly three years after it began the last of the so-called surge troops have now gone.
In 2009, President Obama ordered 33,000 more soldiers into the country to counter escalating Taliban violence. Sixty eight thousand American forces still remain.
Panetta received a traditional Maori welcome upon his arrival earlier today and visited the Auckland War Memorial Museum where he laid a wreath and presented medals to New Zealand defence force personnel.
The US Meritorious Service Medal was presented to Colonel Darryl Tracy for his work as Commander of the New Zealand Provincial Reconstruction Team in Bamyan in 2008.
The US Army Commendation Medal was presented to Lieutenant Commander Karen Bleakley, Lieutenant Colonel James Kaio, Squadron Leader Michelle-Ann Thomson, and Captain Jason Tinsley.
Chief of Defence Force Lieutenant General Rhys Jones said he was proud of the contribution these personnel have made towards New Zealand's mission in Afghanistan.
"Today NZ Defence Force personnel from New Zealand's Navy, Army and Air Force have been presented with awards that recognise the important work New Zealanders have been doing in Bamyan,"he said.
"These personnel can all be proud of their medals, and the hard work involved during their deployment making Bamyan a safer province."
Panetta is the first Pentagon chief to visit in 30 years since Wellington closed New Zealand ports to nuclear warships.
- with Newstalk ZB and Reuters