After months in lockdown that required many city residents to remain home except for essential business, Dili people will get more freedom to step outside from 11.59 pm on Thursday.
However, people are still not allowed to travel from the city to municipalities and health fences also remain around Baucau, Bobonaro and Suai for another seven days.
People are advised to limit house gatherings, socially distance and wear facemasks outdoors.
Under the new rules, public taxis are allowed to operate around the country transporting people who have been fully vaccinated or have travel exemptions. Fully vaccinated people do not need permission to travel.
The government also announced new travel rules for children. This includes children under 6 years travelling with vaccinated parents not needing travel permission and children between 6 and 18 years travelling with vaccinated parents need testing and authorisation.