The US and the EU have lifted crippling sanctions against Iran following the UN nuclear watchdog's finding that Tehran had curbed its nuclear program as promised.

Key points: IAEA report confirms Iran has honoured its side of the nuclear accord

IAEA report confirms Iran has honoured its side of the nuclear accord Raft of US, EU and UN sanctions lifted, oil exports to resume

Raft of US, EU and UN sanctions lifted, oil exports to resume Iran has always said its nuclear activities were for peaceful purposes

In a dramatic move scheduled to coincide with the scrapping of the sanctions, Tehran also announced the release of five Americans including Washington Post reporter Jason Rezaian as part of a prisoner swap with the United States.

Together, the lifting of sanctions and the prisoner deal considerably reduce the hostility between Tehran and Washington that has shaped the Middle East since Iran's Islamic Revolution of 1979.

Tens of billions of dollars worth of Iranian assets will now be unfrozen and global companies that have been barred from doing business there will be able to exploit a market hungry for everything from automobiles to airplane parts.

The UN nuclear watchdog ruled on Saturday that Iran had abided by an agreement last year with six world powers to curtail its nuclear program, triggering the end of sanctions.

"Iran has carried out all measures required under the [July deal] to enable Implementation Day [of the deal] to occur," the Vienna-based International Atomic Energy Agency (IAEA) said in a statement.

Iran to emerge from years of economic isolation

Within minutes, the United States formally lifted banking, steel, shipping and other sanctions on Iran, a major oil producer that has been virtually shut out of international markets for the past five years.

The European Union also began the process of lifting sanctions and Iran's transport minister said Tehran planned to buy 114 civil aircraft from European aircraft maker Airbus.

Australia would also lift sanctions on the Islamic republic, Foreign Minister Julie Bishop said.

"The easing of these sanctions will ensure that Australian business is not disadvantaged in pursuing opportunities in Iran," she said in a statement.

The lifting of sanctions means more money and prestige for Shiite Muslim Iran as it becomes deeply embroiled in the sectarian conflicts of the Middle East, notably in the Syrian civil war, where its allies are facing Sunni Muslim rebels.

America's thaw with Iran is viewed with deep suspicion by US Republicans as well as American allies in the Middle East, including Israel and Saudi Arabia.

US-Iranian suspicion remains deeply entrenched.

Washington maintains separate, less comprehensive sanctions on Iran over its missile program.

For its part, Iran detained 10 US Navy sailors on two boats in the Gulf a week ago, although they were released the next day.

American prisoners leave Iran: reports

In an unusual move, President Barack Obama pardoned three Iranian-Americans charged for violating sanctions against Iran, a lawyer for one of the men said, while prosecutors moved to drop charges against four Iranians outside the United States.

Iran agreed to free five Americans including Rezaian and Saeed Abedini, an Iranian-American Christian pastor sentenced to eight years in prison in 2013 on charges of undermining Iran's national security.

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The Washington Post said on Sunday Rezaian had left Iran with his wife Yeganeh Salehi.

"We are relieved that this 545-day nightmare for Jason and his family is finally over," the statement said.

The other three Americans had also left the country and were bound for Switzerland, Iranian state television reported.

Another prisoner, Matthew Trevithick, has left the country after 40 days in prison. Trevithick, a student and journalist, had travelled and worked in conflict-torn nations including Syria, Mali and Afghanistan.

The prisoner deal was the culmination of months of diplomatic contacts, secret talks and legal manoeuvring that came close to falling apart because of a threat by Washington in December to impose fresh sanctions on Iran for recent ballistic missile tests.

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The detente with Iran is opposed by all of the Republican candidates vying to succeed Mr Obama as president in an election in November.

Republican front-runner Donald Trump said at a campaign event he was happy Americans were being freed, "but I will tell you it's a disgrace that they were there for so long".

Ted Cruz, a conservative senator from Texas and one of the leading Republicans, tweeted in support of Mr Abedini's release: "Praise God! Surely bad parts of Obama's latest deal, but prayers of thanksgiving that Pastor Saeed is coming home."

Democratic presidential hopeful Hillary Clinton took credit for helping to start the sanctions pressure on Iran during her 2009-2013 tenure as Mr Obama's secretary of state.

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Reuters/ABC