Flights to the Egyptian resort of Sharm el-Sheikh were stopped in 2015 after a terror attack on a Russian airliner killed 224 people.
Egyptian officials have since admitted the airport fell well short of international security standards.
The Department for Transport said there had been improvements in security procedures.
Transport Secretary Grant Shapps said lifting the restriction was “the first step” in resuming direct flights.
He said: “The safety and security of British nationals remains our top priority and this decision follows close co-operation between our aviation security experts and their Egyptian counterparts, and improvements in security procedures at the airport.”
Travel company Tui said it will reintroduce Sharm el-Sheikh flights following the decision, “taking into account customer demand”.
According to the Foreign Office, 900,000 UK visitors travelled to the beach resort in 2015, but that number dropped to 231,000 in 2016 after the ban on direct flights.