Thailand says it will resume diplomatic ties with Cambodia after Phnom Penh announced the resignation of ousted Thai leader Thaksin Shinawatra as its economic advisor.
The two countries recalled their ambassadors in November 2009 amid a row over the controversial appointment.
The Thai military removed Mr Thaksin in a coup in 2006, and he has since been jailed in absentia for corruption.
Authorities say he was behind anti-government protests earlier this year.
Mr Thaksin denies any role in the protests, which paralysed the Thai capital for more than two months and left 91 people dead.
"They have announced that they do not have any more ties with Thaksin so our condition to hold back a diplomat has ended," Thai Foreign Minister Kasit Piromya told Reuters news agency.
"Thailand will send our diplomat back tomorrow. Similarly, Cambodia will also send its diplomat back to Thailand."
Relations between the two neighbours have been strained in recent years because of an unresolved border dispute.
Troops have clashed sporadically around the temple of Preah Vihear, which both claim as their territory.