Prime Minister Theresa May has praised the UK's "long-standing friend" Saudi Arabia over its decision to lift the ban on women driving in the ultra-conservative country.
King Salem announced that from June 2018, women in the Gulf state will be permitted to hold driving licences following a ban which has been condemned around the world and resulted in dozens of women being jailed after being caught behind the wheel.
Saudi Arabia is the only country in the world which forbids women from driving and has been highlighted as a key symbol of oppression against women in the Kingdom governed by Shariah law.
The move was announced in a Royal decree broadcast live on state television as well as a media event in Washington.
The Saudi ambassador to Washington, Prince Khaled bin Salman described it as "an historic and big day in our kingdom".
He told reporters: "I think our leadership understands that our society is ready. I think it's the right decision at the right time."
It is unclear if Saudi Arabia plans to relax other laws which restrict women's rights in the kingdom, including being forced to obtain permission from a male guardian if they wish to work, travel, study, marry or access healthcare.
Following the announcement, the PM said: "As a long-standing friend of Saudi Arabia I welcome the Kingdom taking this important step towards gender equality.
"The empowerment of women around the world is not only an issue I care deeply about, it is also key to nations' economic development.
"The UK will continue to work in close partnership with Saudi Arabia as it builds on this progress and delivers its ambitious programme of reform."
Foreign secretary Boris Johnson added: "I welcome Saudi decision to allow women to drive. Big step forward for women's rights. Look forward to more social reform in the future."
The lifting of the ban on women driving forms part of the government's Vision 2030 reform programme aiming to diversify the economy away from oil as well as expand previously restricted social policies.
Last month, women were allowed into the national stadium for the very first time and were also permitted to attend a concert in the Red Sea city of Jeddah.
The UK government has previously been condemned for its "toxic" relationship with Saudi Arabia for continuing to sell arms and weapons to the Gulf state during its bombing campaign against Yemen.
The Campaign Against Arms Trade (CAAT) allege the UK has licensed more than £3.8bn worth of arms sales to Saudi Arabia since it began bombing Yemen in March 2015 despite a "growing body of evidence" to suggest the air strikes have been used to target civilians at schools, mosques and weddings.
The government has also been accused of attempting to bury a report into the funding of Islamic terrorism in the UK said to be highly critical of Saudi Arabia, which the Home Office has admitted may never be published.
The Saudi embassy in London described the allegations in the report as "categorically false".
A spokesperson added: "Our long-standing relationship with the UK and work in countering such extremists has been successful. UK Prime Minister Theresa May, as well as the past prime ministers, have previously spoken of the strength of Britain's relationship with Saudi Arabia and how it has helped to keep people on the streets of Britain safe.
"We do not and will not condone the actions or ideology of violent extremism and we will not rest until these deviants and their organisations are destroyed."