YANGON, Myanmar >> Myanmar freed some of its most famous political inmates Friday, sparking jubilation outside prison gates while signaling its readiness to meet Western demands for lifting economic sanctions.

Prominent political activists, leaders of brutally repressed democratic uprisings, a former prime minister, ethnic minority leaders, journalists and relatives of the former dictator Ne Win were among those released. State media described the presidential pardon freeing 651 detainees as allowing them to take part in "nation-building."

It was the latest in a flurry of accelerating changes in Myanmar sought by the West, including starting a dialogue with opposition leader Aung San Suu Kyi, legalizing labor unions and Thursday’s signing of a cease-fire in a long-running campaign against Karen insurgents.

Myanmar likely now feels the ball is the West’s court to lift the onerous economic measures.

President Barack Obama praised the release as "a substantial step forward for democratic reform," and U.S. Secretary of State Hillary Rodham Clinton said ambassadors would be exchanged between the countries in response to the releases.

The U.S. has not had an ambassdor in Myanmar since downgrading its representation after a 1988 pro-democracy uprising was bloodily quashed by the army.

But the United States and allies may take a wait-and-see approach on sanctions, to see if government truces with various ethnic rebel groups hold, discussions with Suu Kyi move forward and scheduled April elections appear free and fair.

There has been a parade of top Western diplomats through Myanmar lately — Clinton in December and British Foreign Secretary William Hague last week. French Foreign Minister Alain Juppe is scheduled to arrive Saturday.

The message conveyed by Western nations has been clear: They are encouraged by the reform process under President Thein Sein, but economic and political sanctions could not be lifted unless the prisoners were freed. The various sanctions generally ban doing business with Myanmar, block financial transfers, especially by military-backed leaders and their cronies, and also deny visas to the same VIPs.

"I think we are close to the removal of Western sanctions," said Monique Skidmore, a Myanmar expert at the University of Canberra, adding that the U.S. and others might first wait to see Aung San Suu Kyi take a seat in parliament. "There’s a sense that there’s still more to go before the sanctions will be removed."

Thein Sein’s government, Suu Kyi and the West — with Washington its key representative — are involved in a complicated three-way give and take. Thein Sein seeks to normalize relations with the West, which generally defers to Suu Kyi in judging the government’s goodwill and progress toward democracy.

Suu Kyi’s party, marginalized for more than two decades of military rule, seeks a more active role in politics if the government will allow a more level playing field. The re-entry of her National League for Democracy party into mainstream politics is the kind of endorsement the government needs to win Western approbation. What needs to be determined is the price each side is willing to pay.

Until this week, even some of Suu Kyi’s supporters feared she had sold herself short. The country’s most prominent political prisoners had remained behind bars with hardly a sour note struck by Suu Kyi in public. Cease-fire talks had been held between the government and various ethnic minority guerrillas groups, which have been fighting for autonomy for decades, but actual combat between the army and the Kachin minority in the north dominated relations.

Then on Thursday the government announced a cease-fire deal with the main ethnic Karen group — the most durable rebel movement — and the prisoner release followed directly on that.

Whether by chance or design, the latest moves come just ahead of visits by some U.S. senators influential in foreign affairs, including Mitch McConnell and John McCain, whose political muscle can seal a deal — or wreck it.

Human Rights Watch called Friday’s release "a crucial development" in promoting human rights in Myanmar but stressed that an unknown number of political prisoners still remain detained. The group called for their release and urged the government to allow international monitors to enter prisons to verify the numbers and whereabouts of those still jailed.

Until Friday, as many as 1,500 political prisoners were believed to be behind bars, by some counts, and the exact tally of those released Friday will likely take several days. Suu Kyi’s party said it was expecting the release of many of the 600 dissidents it tracks.

"The release of such a large number of political prisoners demonstrates the government’s will to solve political problems through political means," said Win Tin, a senior member of Suu Kyi’s party who previously spent 19 years in prison but was released under a 2008 amnesty. "This amnesty will ease political tension before the upcoming April by-election. The other major problem the government has to seriously tackle now is the issue of ethnic fighting especially in Kachin state."

The party decided to rejoin electoral politics after the military-backed but elected government took office last March, replacing army rule and tentatively easing years of repression. Some critics characterized the NLD’s decision to rejoin electoral politics as a capitulation after years of resistance to military rule. The party won a 1990 general election but was denied power after the military refused to allow parliament to be seated. In 2010, the military held another general election, but the NLD found the rules unfair and declined to participate, leading to its being purged from the list of legal political parties.

The critics fear the NLD’s participation helps the government maintain a veneer of legitimacy for what is actually — by constitutional statute, as well as the majority held by pro-military lawmakers — continued domination of politics by the army.

"I think this year we shall find out whether we are making progress toward democracy," Suu Kyi said in an interview with The Associated Press last week, adding that benchmarks to consider are "the release of all political prisoners,… how the by-elections are conducted,… how much more freedom of information is allowed and whether strong steps are taken to establish the rule of law."

Among the high-profile inmates released Friday were Min Ko Naing, a nearly legendary student leader from Myanmar’s failed 1988 pro-democracy uprising.

Cheers and applause erupted outside the Thayet prison, 545 kilometers (345 miles) north of Yangon, where a huge crowd gathered to see the charismatic activist. Min Ko Naing, leader of the "88 Generation Students Group," was serving a 65-year prison sentence. His most recent arrest came in August 2007 along with 14 other student leaders at a protest against fuel price increases that preceded the monk-led Saffron Revolution, which was violently suppressed.

Activists arrested after the abortive 2007 Saffron Revolution — named for the color of the robes worn by the country’s Buddhist monks — were also freed. Among them were Shin Gambira, 32, a militant monk who helped lead the anti-government protests. Family members said he told them he was in good health.

Also freed was ethnic leader Khun Tun Oo, the chairman of the Shan Nationalities League for Democracy, who was serving a 93-year sentence. He had been arrested along with several other Shan leaders in February 2005 and charged with treason.

Traditional Shan music blasted from speakers outside Khun Tun Oo’s family home in Yangon, where a crowd danced as they awaited his return.

He said the accusations for which he was jailed were baseless, and he was imprisoned only because the Shan refused to take part in a military-directed constitution drafting process.

"I am free and I am back home, but there’s nothing in my heart because from the very first day of my arrest I was the person who shouldn’t be arrested," he said. "We Shans never did anything wrong and the so-called rebellion against the state — secession — didn’t happen."

The government recently signed a preliminary cease-fire agreement with Shan rebels. The Shan Herald Agency for News, an online news site close to the rebels, said five or six Shan political prisoners were freed.

Jailed former Prime Minister Khin Nyunt also was freed. He was ousted in 2004 after falling out of favor with the junta and convicted a year later of insubordination and corruption and sentenced to 44 years under house arrest.

"The democratic process is on the right track," the 73-year-old Khin Nyunt told reporters in Yangon, saying he did not plan to return to politics. Dozens of his colleagues from the Military Intelligence service who were purged with him were also reportedly pardoned.