The news came shortly after Prime Minister Mohammed Naji Otri tendered his government's resignation and was tasked with acting in a caretaker capacity until a new cabinet is formed.
The president is expected to elaborate on a string of reforms announced last week, which came in response to two weeks of protests demanding reform and more freedoms in the country ruled by the Baath party since 1963.
Presidential adviser Buthaina Shaaban has told AFP the authorities decided to lift the state of emergency, which has been in force since the Baath party seized power.
Syrian authorities are also studying the liberalisation of laws on media and political parties as well as anti-corruption measures.
The new cabinet, which is expected to be announced by the end of the week, will face the task of implementing the reforms.
Otri had formed his government in 2003. It was reshuffled several times, most recently in October 2010.
Assad, who rose to power after the death of his father Hafez al-Assad in 2000, is facing extreme pressure at home as the protests turn increasingly violent.
Syrian authorities have accused fundamentalists and "armed gangs" of aiming to incite unrest in the country, particularly in the southern province of Daraa and the northern port city of Latakia which have emerged as the focal points of dissent.
Small demonstrations demanding "freedom" also surfaced in the capital Damascus earlier this month, but were immediately quelled by security forces.
Activists say more than 130 people have been killed and scores injured in clashes with security forces at the Daraa and Latakia rallies. Officials have put the death toll at around 30.
Washington said it would wait and see what the promised reforms amounted to. "We're... waiting and watching to see what comes from the Syrian government," Clinton said.
"We support the timely implementation of reforms that meet the demands that Syrians are presenting to their government, such as immediately eliminating Syria's state of emergency laws," she added.
"We want to see peaceful transitions and we want to see democracies that represent the will of the people."
Hundreds of thousands of Assad supporters turned out for a massive rally in Damascus at the Sabeh Bahrat ("Seven Fountains") square on Tuesday, in a state-organised show of force.
"The people want Bashar al-Assad," they chanted in unison at the rally under a massive picture of their president hoisted on Syria's central bank.
"We are ready to die for Bashar. Every last drop of my blood I am willing to give for him," said Rajeh, a university student, as he made his way through a crowded Damascus street.
"The media wants to see protests in Syria? Here are the protests of Syria."
Top US lawmakers brushed aside suggestions that US forces intervene to aid opposition to Assad's regime.
"I don't hear anybody calling for that," Republican Minority Leader Mitch McConnell told reporters when asked about the prospects for US humanitarian intervention in Syria.
"We obviously feel badly for the Syrian people that they've been subjected to this kind of regime for all of these years, 40 or 50 years. But with so much tumult all throughout the Middle East, I don't think we have a single policy that fits neatly every single country. They're all different," he added.