The US government says it will maintain oversight of the Internet but with far less hands-on involvement.
Icann, the body which oversees the future of the net on behalf of the US, has been given more independence in a new agreement for the next three years.
Dr Paul Twomey, ceo of Icann, said the deal was "a major step forward for Icann autonomy".
The US government has pledged to cede control of the net to private sector hands at an unspecified future point.
Icann, or the Internet Corporation for Assigned Names and Numbers, is a not-for-profit company formed in 1998.
It is the guardian of the underlying architecture of the net, overseeing allocation of domain names such as .com or .net, and the addressing system that links domain names to the numbers computers understand.
It has always been intended that the net coordinator should eventually be a private organisation, but since it has been in existence Icann has been overseen by the US government.
In the past, the government has been criticised for having a stranglehold over Icann. In May 2006, the organisation hit controversy when plans for a .xxx domain for sexually explicit sites were rejected, a move that some saw as politically motivated.
Others believe that the oversight of the net should not be tied to one government, and several statements submitted to a hearing in July 2006 to discuss the future of Icann stated: "No single government should have a pre-eminent role in internet governance."
"The big difference is that we will no longer have our work prescribed by the Department of Commerce and no longer have to report to them every six months with lots of hurdles for us to jump," said Dr Twomey.
He said critics of Icann and its relationship to the US should see this as a major step on the path to an international "multi-stake holder organisation".
"The US has clearly stated that it wants full autonomy and that it is committed to that. It is talking the talk.
"The US government has stated its policy of wanting the management of DNS to be in the hands of the private sector and that Icann is the organisation charged with managing it."
Emily Taylor, director of legal and policy at Nominet, the UK Internet name registry for domain names ending in .uk, said she was uncertain that Icann was really ready to stand alone.
"The real feeling is that Icann is progressing, but it is not fully ready yet.
"If the department of commerce withdrew its function at the moment, nobody has really articulated what Icann would look like.
"What we would like to see in any renewed memorandum is for it to be looking towards transition to the private sector. What would the Icann look like that can be cut loose, what would the principles be, what would people trust?"
Dr Twomey said issues around timing and transparency had to be resolved before Icann could be autonomous.
"I think we are a transparent organisation but as someone said to me: 'Icann is transparent like a credit card agreement: it's all there but not understood by everyone'."
Dr Twomey added: "Security and stability of the Internet is one of our core responsibilities and must be paramount when the decision to cede control is made."
The new agreement takes the relationship between the US government and Icann into the first year of a new administration (in 2009) and there is an 18 month review point in the new deal at which time discussions over autonomy could begin again.
Icann has also been criticised for a lack of accountability; members are not allowed to join the organisation but must instead apply to sub-groups.
A recent report by the London School of Economics, commissioned by Icann, recommended that the organisation allow direct membership.
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