The United States says China has agreed to let blind activist Chen Guangcheng and his family leave the country soon, raising hopes of a resolution to a damaging diplomatic crisis.
State Department spokeswoman Victoria Nuland said on Friday China would expedite travel documents for the rights campaigner, who escaped house arrest and fled to the US embassy, where he spent six days before emerging on Wednesday.
"The Chinese government has indicated that it will accept Mr Chen's applications for appropriate travel documents," Nuland said in a statement.
"The United States government expects that the Chinese government will expeditiously process his applications for these documents. The United States government would then give visa requests for him and his immediate family priority attention."
Beijing earlier said Chen was free to apply to go abroad, opening the door to a face-saving resolution after the activist said he feared for his and his family's safety in China and wanted to go to the United States to study.
US Secretary of State Hillary Clinton said she was "encouraged" by that development in the affair, which erupted ahead of her arrival in Beijing for annual talks that have been overshadowed by the drama.
"Progress has been made to help him have the future that he wants. We will be staying in touch with him as this process moves forward," Clinton said.
The activist, who spent four years in jail after exposing forced abortions and sterilisations under the "one-child" policy, unleashed a diplomatic furore with his flight from his home in northeast Shandong province.
US officials said Chen, 40, left the embassy after Beijing pledged he and his family would be treated "humanely", but since then he has said he fears retribution by Chinese authorities.
"I am in great danger.... I hope the government will respect the commitments to guarantee my rights agreed to between China and the United States," he told AFP by telephone earlier on Friday from the hospital where he is being treated.
The unravelling of the case prompted the United States to renew talks with Chen to try to establish the next move for the activist, who has said he does not want to go into permanent exile but is seeking a period of rest abroad.
Clinton said the US ambassador to China spoke with Chen by phone on Friday and that an embassy doctor visited him at the hospital where he is being treated for injuries sustained in his escape.
China has reacted angrily to the case, demanding a US apology for "interference" in its affairs. But analysts said Beijing would likely allow him to leave the country.
"The Obama administration is putting a lot of pressure on the Chinese to make sure this story will end up nicely for Chen Guangcheng," said Jean-Pierre Cabestan, politics professor at the Hong Kong Baptist University.
"I think the (Chinese) foreign ministry is going to arrange a deal."
The United States has scrambled to contain the growing diplomatic row over Chen, which disrupted the annual Strategic and Economic Dialogue and threatened to hurt cooperation on Iran, Syria and key economic issues.
In extraordinary scenes on Capitol Hill, Chen phoned in to a congressional hearing on his case on Thursday to ask legislators for help to travel to the United States and appealed directly to Clinton.
"I really am fearing for my family members' lives," he said, speaking through a mobile phone held up to the hearing.
"The thing I'm most concerned with now is the safety of my mother and my brother," he told the hearing, as stunned witnesses and reporters looked on. "I really want to know what's going on with them."
Details of how Chen gained entry to the embassy and the circumstances of his departure have been unclear, but The New York Times gave a gripping account of a flight to safety that included a car chase through Beijing.
It said that Chen made his way to the capital where friends had arranged a rendezvous with US officials after hauling himself over walls to escape house arrest.
With Chinese security closing in on them, Chen was pulled into an American vehicle, which threw off the tail and headed for the embassy where the activist was secreted in a US Marine dormitory.
Chen, a self-taught lawyer, has since said he felt pressured to leave the embassy, fearing for the safety of his family who suffered repeated abuses at the hands of local officials in their hometown.
Rights activists said on Friday that Chinese police had also detained Chen's supporters at the hospital where he is being treated, and have beaten two of them.
US State Department officials have been adamant that Chen never requested asylum and strongly denied allegations that he was pressured to leave.
Chen's flight came despite round-the-clock surveillance at his house in Shandong, where he has been under heavy restrictions after completing his jail term in 2010.
Photo: Chen Guangcheng (AAP)