Papua New Guinea says Australia has backtracked on opening a foreign mission in Bougainville.
After Australia's announcement last month, PNG banned Australian travellers to the autonomous region, saying there was no consultation.
The PNG Foreign Minister, Rimbink Pato, says he called his Australian counterpart, Julie Bishop, and met her at the PALM 7 leaders meeting in Japan, and received an apology.
He says although Ms Bishop told him there was written communication to the PNG Government, none was received.
Mr Pato says Australia has agreed not to go ahead with its plans and he has lifted the ban.
"There was nil consultation, no consultation whatsoever with the Papua New Guinea Government. We were entirely justified in what we did so in other words there will be no opening of a foreign mission on the island."
Rimbink Pato says he looks forward to working with Australia, particularly in channelling any aid for Bougainville through the PNG government.
Julie Bishop has released a statement saying she is continuing to hold constructive discussions with the PNG government on how Australia can best support its aid programme in PNG, including an increase in the number of staff in Bougainville.