Mexico is normalizing its diplomatic ties with the government of Honduran President Porfirio Lobo after a coup in capital Tegucigalpa ousted then President Manuel Zelaya, the Mexican Foreign Ministry said on Saturday.

The ministry said in a statement that it would send the Mexican ambassador back to Honduras next week and resume diplomatic functions.

The decision was made after receiving a report of the Organization of American States (OAS) on the current situation in Honduras.

Significant progress has been made by the Honduran government and other social sectors in addressing the main problems caused by the June 2009 coup.

"With this decision, Mexico is normalizing diplomatic relations with Honduras," the ministry said.

In another development, Chilean Foreign Minister Alfredo Moreno said on Friday that the country's ambassador would return to Tegucigalpa.

Several Latin American governments recalled their ambassadors to Honduras to push for Zelaya's reinstatement after his administration was overthrown in a military coup.

Lobo was inaugurated in January after winning an election last November. He has been recognized by the United States, the European Union and most of Central American countries, but several Latin American nations, including Venezuela and Brazil, have yet to recognize him as the legitimate president.

The presidents of Brazil and Nicaragua on Wednesday set conditions for Honduras' return to the OAS, saying it must first condemn last year's coup.