The ‘stay local’ rule will be lifted from Saturday.
It means people from within Wales will be allowed to travel anywhere in the country for the first time since December.
However, until April 12, only those with a reasonable excuse, such as going to work, will be able to travel into or out of Wales.
From Saturday, self contained holiday accommodation, including hotels with en-suite facilities and room service, can reopen to people from the same household or support bubble.
Rules around international travel are not changing.
Wales is moving out of alert level four, and now starting to move into level three, the Welsh Government has said.
The changes were announced at at 11pm on Thursday, March 25, and come into force from Saturday, March 27.
Other changes are:
Six people from two households can meet and exercise outdoors.
Organised outdoor activities and sport can resume for under 18s.
Libraries and archives can reopen.
Limited outdoor activities at historic venues and garden can resume.
The announcement was made as schools prepare to break up for the half term break and ahead of the Easter bank holidays.
The next review of the regulations is due on April 1.
At that review, ministers will look to do the following from April 12:
Allow all pupils and students back to schools, colleges and other education venues. Allow all shops and close contact services to open. Lift the ban on people from England entering Wales.
First Minister Mark Drakeford said: “These further relaxations are part of our careful and phased approach to unlocking the restrictions and enabling people and businesses to resume their activities in the safest possible way.
“We’re only able to do this because of the sacrifices everyone across Wales has made over the last few months – everything you are doing to keep your loved ones safe is also keeping Wales safe.
“The public health position remains stable; our incredible vaccination programme goes from strength to strength – we have headroom to make these changes.
“We are taking a step-by step approach to relaxing restrictions and want to carry on being able to open up Wales.
“To do that we need everyone’s help. That means staying vigilant for signs of infection; isolating if we have symptoms and arranging to get tested.
“It also means following the basic steps to keep us all safe while we’re out and about – keeping our distance from others; not mixing indoors; avoiding crowds; washing our hands regularly and wearing face coverings.”
There were four new reported deaths on Thursday meaning the number of people who have died with coronavirus in Wales within a month of a positive test is now at 5,495.
The infection rate across Wales is now 39.1 cases per 100,000 of population based on the seven days up to March 20, which is down from 40.5 on Wednesday.
The percentage of tests coming back with positive results is now further below the key 5% benchmark at 3.2% in the last seven days.
The data show that 1,320,188 people have now received a first dose of the vaccine and a further 378,795 have had both jabs.