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A photo of Iceland's neighbourhoods. (Photo: AFP) - 

Iceland aims to lift all its COVID-19 curbs by mid-March, which would end a three-stage easing plan that the government presented on Friday (Jan 28).

"There are real changes in our fight against the epidemic, both because the virus itself has changed and because of good vaccination coverage," Prime Minister Katrin Jakobsdottir told a press conference.

From midnight on Friday, the cap on public gatherings will be lifted from 10 to 50 people, and bars and nightclubs, which have been closed for two weeks, will be allowed to reopen until midnight, as will restaurants.

Swimming pools, sports halls and ski resorts will also be able to accommodate up to 75 per cent of their maximum capacity, currently, they can take up to 50 per cent, and the social distancing rule will be reduced to 1m instead of 2m.

The new restrictions will remain in place until Feb 24, when the second phase will be triggered.

The capacity of public gatherings will then be increased to 200 people and swimming pools, sports halls and ski resorts will be able to function normally again.

At the same time, quarantine and isolation rules will be dropped.

"During the lifting of the measures, it can be expected that the number of domestic infections will temporarily increase, which may also increase the number of those who become seriously ill, and disrupt the operations of many businesses," the government warned in a statement.

The Icelandic authorities then intend to lift all domestic restrictions by Mar 14, provided no new strains of the virus are discovered or an increase in severe cases puts the healthcare system under pressure.

More than 80 per cent of Iceland's population over the age of five have been fully vaccinated and 52 per cent of those over 16 have already received the third dose.

The subarctic island nation has recorded 64,486 confirmed cases and 46 deaths linked to the COVID-19 pandemic.

The country, which has seen about 1,300 new confirmed cases a day in recent weeks, already announced a relaxation of its quarantine rules on Tuesday//CNA