Vertical drinking will be permitted for up to 100 people in an indoor venue and 250 people at an outdoor venue.

The decision to remove restrictions comes after significant pressure from the hospitality industry, with some operators saying the restrictions had deterred patrons from visiting licensed venues.

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Tasmanian Hospitality Association chief executive Steve Old said the ban on dancing and vertical drinking had been the biggest issues facing hospitality operators recently.

"Hospitality operators can now prepare to provide the premium hospitality experience locals and visitors have come to know and expect, and can take more confidence into the festive season that their businesses can remain viable into the future," he said.

Mr Old said the cap of 100 people would provide some challenges to the state's nightclub operators, although the government's caution was understood.

"The industry would appreciate a further roadmap out of the remaining restrictions and the industry compliance required to achieve unrestricted operation," he said.

Reactions from local hospitality operators have been mixed, but are overall positive as the industry begins to recover from a quiet winter as they head into the traditionally busier warm summer months.

It's welcome news for Star Bar and Sports Garden Hotel licensee Matt Goss.

"Dancing's back," he said.

"As is what we've coined vertical drinking, as a publican, as venue owners and operators, it's welcome news before Christmas.

"It means that things are going to be a little bit more relaxed for patrons when they come out and enjoy their work functions and catch-ups in the lead-up to Christmas."

Mr Goss said that while he won't be wearing his dancing shoes come 5pm, he was looking forward to welcoming patrons at both venues to "some form of normal".

"We'll have live music back at Star Bar after dinner," he said.

"We'll have a DJ back in the venue for the first time in months, since March. It's been a long time.

"It's great for our industry, it's great for the music and live entertainment industry as well.

"There's a lot of musicians that would have been harder hit by this than we were, because we've been able to open but they haven't been able to do their thing."

Mr Goss said he held some concerns on how to police numbers of patrons standing and dancing inside depending on venue capacity limits.

"It'll probably be even more tricky going forward," he said.

"But look, we've learnt to adapt - from March when we were told to shut, we've adapted every few weeks since that to do the best that we can.

"It speaks to the resilience of the industry really."

However the doors will remain closed to the Lonnies Niteclub dance floor for the time being.

The Launceston venue transformed part of its venue into a new business, Front Bar, to bring customers back in, but the nightclub owner said the announcement, while welcomed, "doesn't change anything" for the business.

"For us, it's still not worth it because of the venue capacity limit," he said.

"It's not worth it financially if only 100 people can dance when our normal [pre-COVID restrictions] venue capacity is more than triple that.

"We'll be watching and waiting until capacity limits change but it's a step in the right direction."

Sporties Hotel owner Nick Daking was one hospitality professional spearheading the campaign to lift restrictions, calling the announcement "a weight lifted off our shoulders".

"It's a sense of relief," he said.

"We've been working to keep people seated for months now and it's been really hard and a lot of pressure for our staff, especially knowing that people from WorkSafe could come in and fine us if someone wasn't doing what we asked them to do.

"It was one of our biggest anxieties because you're always on alert and we just didn't need it."

While Mr Daking said he wished the decision had been made sooner, he was grateful that businesses could continue to move forward.

"The damage was almost done, if it hadn't happened now it'd have been extremely stressful for us in the next week leading up to Christmas," he said.

"While it would have been awesome to have had this two or three months ago, at the end of the day I respect the decisions that have been made and the reasoning behind them.

"I want to say to the Premier and to Public Health - thank you for giving us what we need, let's now just stand up and get on with it. I know I'll be raising a glass tomorrow and toasting the Premier."

Commercial Hotel owner Garry Laskey said he was extremely happy with the decision to lift restrictions.

"We knew it was a matter of time before the government announced it," he said.

"It's something that should have happened at least a week ago, but we're on track now with the rest of Australia, which is great."

Mr Laskey said it took the stress and worry out of running a venue.

"It means that rather than our security guards having to walk around and tell people to sit down, they can actually do their jobs," he said.

"It means that if you're walking through the bar with a drink and you spot a friend, you can stop and actually say hi and have a chat with your drink, that pressure and hassle has gone."

Venue caps are under consideration by Public Health, with announcements expected to be made on that next week.

Gatherings in homes will also be increased, from 40 people to 100 people.

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