The government has removed restrictions on military flights and arms sales, and released an extra SFr20 million ($14.4 million) in humanitarian aid for Iraq.
Bans covering coalition flights over Swiss airspace and weapons exports to countries involved in the war had been imposed to protect the country's traditional neutrality.
The measures were announced on Wednesday following a meeting of the Swiss cabinet.
Speaking after the session, Micheline Calmy-Rey, the Swiss foreign minister, said the cabinet had discussed in detail the latest developments in Iraq.
Switzerland imposed the bans on military flights after United States-led forces attacked Iraq without a second United Nations Security Council resolution.
At the time, the Swiss said its neutrality would be compromised if it allowed coalition forces to use its airspace.
Calmy-Rey said the decision to lift the bans remained consistent with Swiss neutrality, because Iraqi authorities were no longer in a position to offer resistance.
She added that the Swiss decision was no indication that the cabinet believed the war was over.
Money tied to UN mandate
Calmy-Rey said the need to help rebuild Iraq had become a key priority for Switzerland.
The approval of a further SFr20 million in humanitarian aid for Iraq increases Switzerland's total commitment to SFr30 million.
Half of the additional funding will go directly to the International Committee of the Red Cross (ICRC), which has launched an appeal for urgent help.
Calmy-Rey added that the Swiss contribution was heavily dependent on whether the reconstruction of Iraq was conducted under a UN mandate. She reiterated that the UN should play a central role in this task.
Prior to the outbreak of war, Switzerland also imposed limits on weapons exports to coalition countries.
A government official said the restrictions had resulted in the inspection of some 65 orders. Fifty-six of these were approved, while the remaining cases are still to be determined.
The controls were largely directed at exports to the US and Britain; however deliveries to Australia, Denmark and Poland were also covered by the ban.
Swiss-based Iraqi diplomats
Following the collapse of Saddam Hussein's authority in Iraq, questions have been raised about the official status of the country's diplomats in Switzerland.
A spokesman for the Swiss Foreign Ministry on Wednesday said the envoys still enjoyed full diplomatic status.
However, because Iraq is now bereft of a central authority, Swiss-based Iraqi diplomats are no longer able to accept or act upon instructions from Baghdad.
Swiss officials said they would not force the diplomats to leave, but added that they would not hinder any decision by them to vacate their posts.
Before the war began four weeks ago, Switzerland defied a US request for the expulsion of Bern-based Iraqi diplomats.
Attention has also turned in Switzerland to the plundering of priceless Iraqi cultural artefacts.
In order to prevent the sale and trade of stolen artefacts, several Swiss groups have called for the creation of an inventory of stolen items. The measure would help limit illegal trade in Iraqi goods.
A Swiss parliamentary commission recommended on Tuesday that Switzerland compile a list of treasures plundered from Iraqi museums. The foreign policy commission of the House of Representatives said the country must not become a centre for stolen artefacts.
The Berne Declaration, a leading Swiss non-governmental organisation, has called on the government to establish an inventory and tighten customs checks.
In the past, Switzerland has been accused of turning a blind eye to the sale and trade of stolen or illegal cultural artefacts.
The Swiss parliament is poised to debate tougher anti-smuggling laws during its summer session.
swissinfo, Jacob Greber
The wartime restrictions on coalition military flights over Switzerland and arms sales to countries involved in the Iraq war have been lifted by the government.
The bans had been imposed to protect the country's traditional neutrality.
The government has also released an extra SFr20 million ($14.4 million) in humanitarian aid for Iraq, bringing it to a total of SFr30 million.
Half of the additional funding will go directly to the International Committee of the Red Cross.
A parliamentary commission has recommended that Switzerland compile a list plundered Iraqi artefacts, so that the country does not become a centre for stolen treasures.