Media playback is unsupported on your device Media caption Clinton: "This is... about the human rights and aspirations of a billion people here in China."

China says prominent dissident Chen Guangcheng can apply to study abroad, potentially indicating a way out of the diplomatic crisis with the US over him.

A foreign ministry statement said Mr Chen could "apply through normal channels in accordance with the law".

The blind dissident fled house arrest last month and spent six days inside the US embassy. He left but now says he wants to go to the US with his family.

His case has overshadowed high-level US-China talks taking place in Beijing.

"If he wishes to study overseas, as a Chinese citizen, he can, like any other Chinese citizens, process relevant procedures with relevant departments through normal channels in accordance to the law," Xinhua news agency quoted spokesman Liu Weimin as saying.

Speaking at the end of the two-day annual strategic dialogue, US Secretary of State Hillary Clinton said she was "encouraged" by the Chinese statement.

"Progress has been made to help him have the future he wants," she told a news conference in Beijing.

Mrs Clinton also confirmed that US embassy staff, including a doctor, had been able to meet Mr Chen.

Paperwork

Analysis After delivering Chen Guangcheng into Chinese hands, the Americans will now be under pressure to secure his safety. Mr Chen left the US embassy in Beijing saying he wanted to stay in China. It is now clear he wants to leave. But that might not be easy to arrange. While the activist was in the embassy the US had more control over his fate than now. At the moment, the Americans seem to be finding it difficult even to see the activist, as he languishes in a hospital bed, surrounded by guards. Mr Chen came out of the US embassy thinking his safety had been assured - but it is hard to escape the conclusion that he is already in detention.

Earlier, China had demanded an apology from the US for sheltering Mr Chen in its embassy.

Despite the apparent change of heart from the government, one human rights lawyer told the Reuters news agency that Mr Chen could still be delayed or prevented from leaving the country.

"This notice from the Ministry of Foreign Affairs is positive news, but how it will play out we don't know," Tang Jitian told Reuters.

"For instance, getting the approval for the paperwork to go - there are many potential pitfalls. We can't be 100% optimistic."

Mr Chen is currently in a Beijing hospital, sealed off by Chinese police.

The deputy head of mission at the US embassy to Beijing was seen arriving at the hospital on Friday, carrying gifts. He met Mr Chen's wife Yuan Weijing but was prevented from meeting the dissident himself.

On Thursday, Mr Chen telephoned a US Congressional hearing in Washington DC, saying he feared for the safety of his family and wanted to meet Mrs Clinton face to face.

Media playback is unsupported on your device Media caption Chen Guangcheng said he was not allowed to see US officials (seen here leaving gifts outside hospital) - he said the situation was very dangerous

Mr Chen spent a week in the US embassy but left after initially accepting China's assurances of his safety.

However, he later said that he only realised the full extent of the threats against his family members after he left the embassy.

'Boundless range of issues'

Speaking after talks with the Chinese leadership, Mrs Clinton said she had raised the issue of human rights, although she did not mention Mr Chen by name.

Media playback is unsupported on your device Media caption Mr Chen made a dramatic phone call to a US Congressional hearing

"Of course, the United States continues to raise human rights because we believe that they are essential for every country to uphold," she said at the end of the two-day annual strategic dialogue with China.

"We raise specific matters of individuals and situations whenever necessary because we cannot ignore our areas of difference in the comprehensive relationship that we are building," Mrs Clinton said.

China's top diplomat, foreign relations councillor Dai Bingguo, said the talks had covered a "boundless range of issues".

"There's nothing we haven't discussed. But I think we have discussed one fundamental issue, that is how to build a new China-US relationship, a new relationship between great powers," Mr Dai said.

Mr Chen told the BBC he had changed his mind about staying in China because he believed Beijing had reneged on an agreement to guarantee his safety.

There is no official confirmation of any such agreement, but media reports from the US suggest that Mr Chen had been promised safety in a university town in China.

Dissident 'deals' for exile Fang Lizhi: Intellectual who inspired Tiananmen Square protesters. The day after tanks moved in, he sought refuge in the US embassy. He was finally allowed to leave in 1990 after a complex deal, which saw him go to the UK to study and then into political exile in the US

Intellectual who inspired Tiananmen Square protesters. The day after tanks moved in, he sought refuge in the US embassy. He was finally allowed to leave in 1990 after a complex deal, which saw him go to the UK to study and then into political exile in the US Wang Dan: One of the Tiananmen Square student leaders, he spent time in prison, before being released ostensibly for medical reasons and sent to the US for treatment in 1996-1997 where he settled as a political exile

One of the Tiananmen Square student leaders, he spent time in prison, before being released ostensibly for medical reasons and sent to the US for treatment in 1996-1997 where he settled as a political exile Wei Jingsheng: Chinese democracy activist who was sentenced to 14 years in prison but released early in 1997 on "medical parole" and immediately deported to the US

Mr Chen, 40, is a lawyer who has campaigned against forced abortions and sterilisations of women under China's policy of one child per family.

Mr Chen told the Associated Press news agency his phone calls to American officials "keep getting cut off after two sentences".

He also told AP his wife was being followed and filmed by unidentified men whenever she was allowed to leave the hospital. And he said one of his friends was taken away by state agents and beaten after he tried to visit Mr Chen.

The case has increasing political resonance in the US, where Republican presidential candidate Mitt Romney criticised the administration of President Barack Obama.

Mr Romney said that if reports that US officials had persuaded Mr Chen to leave the embassy were true, "this is a dark day for freedom and it's a day of shame for the Obama administration".

The Beijing Daily, one of China's main official newspapers, said Mr Chen was an American pawn and criticised US ambassador Gary Locke as a "backpack-wearing, Starbucks-sipping troublemaker".

Mr Locke caused a stir in China last year when he was seen carrying his own backpack and ordering his own coffee at Seattle airport, in contrast to Chinese officials who usually travel with an entourage.