The unanimous verdict means that Liberia has now done enough to enter the Kimberley Process, an international certificate scheme for rough diamonds which is based on internationally agreed standards.
If it deems it necessary to do so, the 15-member body can review its decision to lift the embargo within 90 days.
Emyr Jones Parry, the ambassador for the UK which currently holds the rotating council presidency, said that Liberia could fully join the Kimberley Process.
"That's a reflection of our confidence in that country [and] in its leadership, and I wish that it should now progress quickly," he said.
Lami Kawah, the Liberian ambassador, welcomed the news and said it meant a lot to Liberia and the people of the country.
He added that as Liberia moves forward, it was happy to continue the monitoring process into its diamond industry.
Liberia, Sierra Leone and other west African countries were affected by the trading of blood diamonds which funded civil wars.
The UN Mission in Liberia (UNMIL) maintains a strong presence in the country as Liberia rebuilds and benefit from legal diamond trading.
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