David Cameron has called for sanctions against Burma to be eased after holding talks with pro-democracy leader Aung San Suu Kyi during an historic visit to the country.
Mr Cameron insisted that moves towards democratic reform should be rewarded.
He was speaking alongside the Nobel Peace Prize laureate in the garden of the lakeside villa in Rangoon where she spent 15 years under house arrest.
"I think it is right to suspend sanctions that there are against Burma," he said. "To suspend them, not to lift them."
Mr Cameron went on: "There is the real prospect of change and I'm very much committed to working with you in trying to help make sure that your country makes those changes.
Ms Suu Kyi said: "We still have a long way to go but we believe we can get there.
"I believe President Thien Sein is genuine about democratic reforms and I am very happy that Prime Minister Cameron thinks that the suspension of sanctions is the right way to respond to this."
It comes after Mr Cameron met the country's president, shortly after his arrival in the purpose-built capital Naypyidaw.
His visit to Burma is the first by a British prime minister since independence in 1948 - and possibly the first by a serving PM ever, as the Foreign Office can find no trace of such a visit in its extensive records.
While Mr Cameron knows his visit will encourage optimism and expectation of further reform in Burma, he will also be preaching caution, knowing the country's progress towards democracy is fragile and could potentially be reversed.
The process of reform in Burma, which is also known as Myanmar, has been as unexpected as it has been rapid and a backlash from resentful members of the military - still overwhelmingly the dominant force in the country - cannot be ruled out.
However, British officials have been watching recent changes closely, in particular the by-elections which resulted in a landslide for Ms Suu Kyi's National League for Democracy.
They judge that now is the time for Mr Cameron to personally endorse the process of reform, and to try to urge it forward.
Mr Cameron has been encouraged by what he has been told by other regional leaders during his trade tour of the Far East .
Both the Malaysian prime minister and the Indonesian president told him of their belief that Burmese President Thein Sein is sincere in his desire to bring change - and most important of all Ms Suu Kyi has told Mr Cameron of her conviction that the process of reform is genuine, and worth engaging with.
Mr Thien welcomed Mr Cameron to his official residence in Naypyidaw earlier, hailing their meeting as "historic".
The ex-general told him through an interpreter: "We are very pleased and encouraged by your acknowledgement of Myanmar's efforts to promote democracy and human rights."
A spokesman for Number 10 said: "The Prime Minister believes that the president is sincere in what has happened so far. He is cautiously optimistic for the future."
Ahead of the visit, Downing Street was anxious to dispel any sense that the PM, who has been banging the drum for British business throughout his tour of the Far East, will be exploring opportunities for commercial engagement with Burma in the future.
Downing Street officials stress that this is strictly a political visit. A handful of business figures who have travelled with Mr Cameron remain on the prime ministerial plane but the Government says they will have an exclusively cultural itinerary, and no occasion to talk shop.