US President Barack Obama's historic decision to renew ties with Cuba was a diplomatic triumph but he faces a tough battle with Congress over lifting the embargo at the heart of the dispute.

Celebrations broke out on the streets of Havana as people in the communist-run island savored the prospect of an end to the five-decade-old US trade embargo and perhaps a brighter future.

From China to Chile, plaudits rang out. South American leaders holding a trade meeting in Argentina interrupted their session and broke into euphoric applause.

In making the announcement, Obama said decades of trying to isolate Cuba and oust the communist regime had failed, and it was time to turn "end an outdated approach."

Beijing said Thursday it hoped the US "can lift its embargo on Cuba as early as possible."

But, as world leaders welcomed the groundbreaking announcement, the harsh reality remained that the embargo, a cornerstone of US policy, is here to stay, at least for the near future.

"This Congress is not going to lift the embargo," Republican Senator Marco Rubio, a Cuban-American seen as a possible presidential candidate in 2016, told reporters.

He blasted Obama's moves as "a victory for oppression" and said he would "use every tool at our disposal in the majority to unravel as many of these changes as possible."

Experts agree that, in addition to government agencies signing off on rolling back the embargo, congressional legislation would be needed to repeal laws like the Helms-Burton Act of 1996, which tightened prohibitions on US trade with Cuba.

Obama said he would urge Congress to lift the embargo imposed in 1960, while using his presidential authority to advance diplomatic and travel links and ease restrictions on finance.

"We are all Americans," Obama declared, breaking into Spanish.

But the Republicans will take full control of Congress in January and, with anger still pulsing over Obama's unilateral immigration action last month, a swift repeal of the embargo is unlikely.

While some backed Obama's move key Democrats, including Senator Robert Menendez and congressman Eliot Engel, expressed opposition.

"I believe that Congress must see a greater political opening in Cuba before lifting the embargo," said Engel, the top Democrat on the House Foreign Affairs Committee.

The US embassy in Havana was closed in 1961, two years after rebels led by Fidel Castro ousted president Fulgencio Batista, although a large US interests section still operates.

Funding to re-open the US mission in Havana would require congressional appropriation, and lawmakers like Senator Lindsey Graham say they would seek to block it.

Obama even raised the possibility -- utterly unthinkable until now -- of his visiting the island, just 90 miles (145 kilometers) from Florida.

The European Union, which is also moving to normalize ties with Cuba, hailed the breakthrough as a "historical turning point."

"Today another Wall has started to fall," said EU foreign affairs head Federica Mogherini.

In Havana, Cubans were jubilant.

"I have goosebumps all over," said Ernesto Perez, 52, who works at a cafe in Havana's historic city center.

But some Cuban-Americans in Miami, historically a hotbed of opposition to the Castro regime, expressed dismay.

Obama and President Raul Castro praised the help given by Pope Francis, the first Latin American pontiff, and the Catholic Church in brokering better relations between the long-time enemies.

In response, the Vatican said the pope congratulated both governments for overcoming "the difficulties which have marked their recent history."

The breakthrough came after Havana released jailed US contractor Alan Gross and a Cuban who spied for Washington and had been held for 20 years -- one of the most important US agents in Cuba.

Havana also agreed to release 53 political prisoners.

The United States in turn freed three Cuban spies, and Obama said he had instructed the US State Department to re-examine its designation of Cuba as a state sponsor of terrorism.

The decades-long stand-off was marked by incidents that threatened to send the Cold War to boiling point.

CIA-backed Cuban exiles suffered a bloody defeat in the Bay of Pigs invasion and during the missile crisis US warships blockaded the island.

The embargo hurt the Caribbean island's economy, but it failed to unseat the communist government led by the Castro brothers.

Obama now has only two years left in office, Fidel Castro is 88 and ailing and his brother Raul is 83.

With their window for action closing, both sides were under pressure to make a gesture.