The UK's high commissioner in India will soon visit Gujarat to meet the controversial state Chief Minister Narendra Modi, the Foreign Office says.
The UK and many other Western governments broke off contact with Mr Modi's government after the 2002 riots.
Three British citizens were among more than 1,000 people, mostly Muslims, killed in the religious riots.
British government sources say the visit has been arranged because it is in the "UK's national interest".
"Ten years later our national interests are better served by engaging, not continuing isolation," an official said. "It's about Gujarat, not Modi."
Gujarat is one of India's most economically advanced states and many British companies are already investing in it, while others are waiting to.
A significant percentage of Britons of Indian descent have their origins in Gujarat.
Mr Modi, who faces re-election in December, has welcomed the announcement, as has his Bharatiya Janata Party (BJP).
But the move is likely to prove controversial as Mr Modi was accused of doing little to prevent the violence, the BBC's Sanjoy Majumder in Delhi says.
Riots erupted after 60 Hindu pilgrims died in a train fire in 2002 and Muslims were blamed for starting the fire.
Hindu mobs eager for revenge went on the rampage through Muslim neighbourhoods in towns and villages across Gujarat in three days of violence following the fire.
Gujarat's authorities, under Mr Modi, were accused of not doing enough to stop the riots.
Mr Modi has always denied any wrongdoing in connection with the violence, but has never expressed any remorse or offered any apologies.
A 2008 state inquiry exonerated him over the riots, but one of his close aides Maya Kodnani was jailed for 28 years in August.
An internal British report at the time described the violence as pre-planned with the support of the state government.
The family of two British citizens killed during the riots criticised the UK government for ending its 10-year boycott of Mr Modi.
Yusuf Dawood, brother of Saeed and Sakil Dawood, who were allegedly murdered by a mob along with their friend Mohammad Aswat, told the BBC that it was shameful that the UK was reaching out to the Gujarat leader.