The government said in a statement that while the building materials "are liable to be used for Hamas military purposes (building bunkers, fortifying positions and digging tunnels), Israel will permit their entry into Gaza so as to facilitate construction projects."
Because of the blockade, little reconstruction has taken place in the Palestinian territory since Israel's devastating 22-day military offensive, which ended in January 2009.
A separate list maintains a ban on the import of arms and ammunition as well as "dual-use" items Israel fears could be used for military means.
They include rock drills and equipment for drawing water from excavated sites, certain fertilisers, ball bearings, diving equipment, gliders and fireworks.
"I welcome the government's publication of the list," said Middle East peace envoy Tony Blair.
"The list of controlled items is tightly defined to protect Israel's legitimate security needs," said Blair, noting that "implementation will be the test."
Blair had worked with the Israeli government to switch from a policy that barred all but humanitarian goods and essential items from going into the Palestinian territory.
The United States, the European Union and Britain also welcomed the move.
"This is an important step in implementing the new policy announced by Israel two weeks ago," said Tommy Vietor, a White House spokesman.
President Barack Obama "looks forward to discussing" the matter during his Oval Office talks with Prime Minister Benjamin Netanyahu on Tuesday, he added.
EU foreign affairs chief Catherine Ashton hailed the move as "another significant step forward in the review of its (Israel's) policy on Gaza."
"Israel's new policy should improve the lives of the ordinary people of Gaza while addressing the legitimate security concerns of Israel," Ashton said.
Britain's Foreign Secretary William Hague said, "This step shows that it is possible to lift the pressure on ordinary Gazans without compromising the security of ordinary Israelis.
"All parties must now work together urgently to deliver real change on the ground." he added.
The construction materials allowed in under international supervision include cement, iron, steel beams, steel cables, asphalt and lumber beams and boards more than two centimetres (one inch) thick, even though Israel said the latter could be used in tunnels dug to attack Israeli forces.
The new policy came in response to mounting international pressure on Israel to ease its four-year siege on Gaza after nine Turkish activists were killed in a May 31 commando raid on a flotilla of aid ships trying to bust the blockade.
Israeli human rights group Gisha said the easing of the blockade did not go far enough.
"There can be no economic recovery unless Israel ends its ban on manufacturers in Gaza exporting finished products," the group said.
"There can be no healthy, intact Palestinian society and no two-state solution unless Israel allows Palestinians to travel between Gaza and the West Bank."
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