A home department official told IANS that following a ground report suggesting calm and no untoward incidents, the state government gave a go ahead to lift the curfew, which was clamped after violence erupted Sep 7.
Night patrolling by armed columns and presence of police force at sensitive points would however continue, officials said.
"The security level has been scaled down but we will be on vigil and the intelligence set up in the city and rural areas has been shored up to prevent any resurfacing of violence," said a police official.
No decision however has been taken to withdraw the army from the district. A decision to do so, officials said would be taken later at the highest level of the government.
Schools and educational institutions would also open from Tuesday but as a matter of abundant caution, time limits have been set on opening of markets and liquor vends and they have been asked to down shutters by 7 p.m.
At least 48 people were killed and over 43,000 displaced in the communal riots that continued for over four days. The displaced have taken refuge in the 38 relief camps set up by the state government, and many have refused to go back home.
Chief Minister Akhilesh Yadav visited the affected areas Sunday, while Prime Minister Manmohan Singh, UPA chairperson Sonia Gandhi and Congress vice president Rahul Gandhi made a visit Monday.