Two households in Wales will be able to form one "extended household" to meet indoors and stay overnight from next Monday, the Welsh Government has said.
First Minister Mark Drakeford said it means grandparents "will be able to see and hold their grandchildren again".
People can only be in one extended household, which cannot be changed once arranged. Travel restrictions are due to be lifted the same day.
It follows similar "support bubble" arrangements elsewhere in the UK.
The changes will mean people can have physical contact, exercise, cook and eat together, and also stay in each other's homes.
There is no limit to the number of people that can be in the two households.
But, under the rules, if anyone in an extended household develops symptoms the entire household will need to self-isolate.
The Welsh Government has asked people to keep records to help with contact tracing if that happens.
People shielding can also be included but the first minister warned that if they join an extended household it "will increase their risk of being exposed" to coronavirus.
Mr Drakeford said: "Creating extended households will enable many families to be reunited for the first time since March.
"Grandparents will be able to see and hold their grandchildren again.
"It will help support many working parents with informal childcare over the summer months and it will also support those who are caring for others."
'Game-changer for me'
Jan Maddox, 71, has been living alone in Newport since March and has not been able to see her partner Nigel Swaby, who lives in a village near Tamworth.
"Virtually for the last three months I've been walking up and down the road," she said.
"It's the same houses, its the same hedgerows, it's the same everything."
Ms Maddox said the changes will be a "game-changer" for her, and if the travel restrictions end on 6 July she said her partner would "pick me up and he's going to take me back to the Midlands".
'Think about the risks'
Mr Drakeford said extended households means that in some cases "especially in larger families, this may mean making some difficult choices."
The first minister asked viewers of the daily Welsh Government press conference to "think about the risks".
"Think about the consequences - if anyone in the extended household becomes ill, everyone will have to isolate for 14 days," he said.
"For some people this will have a greater impact than for others, and needs to be thought about carefully."
The moves coincide with plans to end Wales' stay local rules on 6 July if cases continue to fall, and follows the opening of non-essential retail last week.
If the changes result in any "flare ups" the Welsh Government will be able to "make a connection between cause and effect", Mr Drakeford said.
"We make the changes on the basis of advice and the advice is always that these steps are proportionate and shouldn't lead to a further acceleration in the spread of coronavirus."
The first minister said he did not have the "detail in front" of him when he was asked how it would impact people in houses of multiple occupation.
Mr Drakeford said further guidance will to be published later this week.
The Welsh Conservatives welcomed the news but questioned why it could not have been announced last Friday "to prevent another lost weekend".
Angela Burns, health spokeswoman, said: "So many families in Wales need such a boost after so long apart, and so if there is science behind why the decision could not have been announced on Friday, then the First Minister should put it into the public domain."
Every time there's an announcement on lifting a lockdown restriction, it's accompanied at some point with guidance notes explaining the finer details.
On extended households, those guidance notes will be awaited more keenly than usual because there's a lot we still don't know.
The first minister said that extended households would be required to keep records to help track and trace contacts in the event that a member develops Covid.
It's not clear what the nature of those records will be. Will extended households have to register and provide contact information? Will they have to keep records of meetings? What happens if they don't?
Another big question is what happens to people who rent rooms in shared houses or older people in care homes. Will they be allowed to participate in the extended household scheme and if so how will that work?
What is the situation elsewhere in the UK?
In England households of any size will be able to meet indoors or outside from 4 July. It does not need to be the same set of households.
The groups are expected to maintain social distancing, unless they are part of the same support bubble.
That is where people living alone can stay with other households - measures also in place in Northern Ireland.
The Welsh Government has not used the word bubbles, instead using the term "extended households" also seen in Scotland.
There, extended households are limited to a household meeting another which has just one person alone, or only with children under 18.