Ending the emergency powers was one of the demands voiced by opposition groups which have been staging weekly protests in the Algerian capital that sought to emulate uprisings in Egypt and neighboring Tunisia.

However, one of the organizers of the protests told Reuters this week that lifting the state of emergency was not enough, and that the government must allow more democratic freedoms.

In Washington, President Barack Obama welcomed the move but said the Algerian government needed to do more.

"This is a positive sign that the government of Algeria is listening to the concerns and responding to the aspirations of its people, and we look forward to additional steps by the government that enable the Algerian people to fully exercise their universal rights," Obama said in a statement.

"The United States is committed to continuing our cooperation with the government of Algeria as it works to represent and meet the needs of all Algerians," he said.

An order signed by President Abdelaziz Bouteflika lifting the state of emergency came into force on Thursday after it was published in the government's official gazette.

Algeria is a major energy exporter that pumps gas via pipelines under the Mediterranean to Europe.

The state of emergency was imposed to help the authorities combat Islamist rebels, but in the past few years the violence has subsided and government critics have alleged the emergency rules are being used to repress political freedoms.

The lifting of the state of emergency will have few practical implications. New rules were also adopted which will allow the military to continue involving itself in domestic security, as it had done under the emergency powers.

The emergency rules banned protest marches in Algiers, but Bouteflika said this month the restriction would remain in force indefinitely.

Bouteflika, who is 73, is likely to remain under pressure -- both from protesters and from inside the ruling establishment -- to deliver more change and to explain to the public what he plans to do.