The Ethiopian prime minister, Hailemariam Desalegn, announced the release of all political prisoners and the closure of a notorious detention centre. The amnesty includes all previously sentenced politicians and other individuals.
The Horn of Africa country has been wracked by violence for nearly three years, with protests first breaking out in its Oromiya province over allegations of land grabs.
The activist was born in Ethiopia but became a British citizen after seeking political asylum in London in 1979, and he has raised a family in the UK.
Almost 700 people died in one bout of unrest during months of protests in 2015 and 2016, according to a parliament-mandated investigation.
"Political prisoners that are facing prosecutions and are already under arrest will be released", Hailemariam said.
Some of the prominent politicians now in custody include opposition leaders Bekele Gerba and Merara Gudina, and several journalists also remain in detention.
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"A new chapter for human rights will only be possible if all allegations of torture and other ill-treatment are effectively investigated and those responsible brought to justice".
In recent months, a spate of ethnic clashes have also taken place.
Ethiopia's ruling party, in a statement issued after its evaluation last week, affirmed its full commitment to address the challenges faced by the country and to ensure the sustainability of the gains made so far.
Rights groups and opposition groups in Ethiopia had been calling for the release of political prisoners, saying they were arrested on trumped-up charges and were being punished for their points of view.
The government in Addis Ababa has been denying imposing political restrictions. Human Rights Watch had alleged that Maekelawi, a detention facility in Addis Ababa, was used to conduct illegal interrogation methods in 2013.
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