President Joyce Banda has said Malawi will overturn its ban on homosexual acts - the first African country to do so since 1994.
Several Western leaders have recently said they would cut aid to countries which did not recognise gay rights.
Mrs Banda took power last month after her predecessor, Bingu wa Mutharika, died of a heart attack.
She has since reversed several of his policies, including devaluing the currency, in a bid to get donor funding restored.
Many donors cut aid under Mr Mutharika, accusing him of economic mismanagement and political repression.
After a storm of international condemnation, he did pardon the two Malawian men on "humanitarian grounds only" but said they had "committed a crime against our culture, against our religion, and against our laws".
Homosexual acts are illegal in most African countries.
In Uganda, an MP recently introduced a bill which stipulated the death penalty could be imposed for some homosexual offences, although he has since said he now wants this changed to life in prison.
In a speech to parliament, which was broadcast live on national radio, Mrs Banda said: "The Indecency and Unnatural Acts laws shall be repealed."
Earlier this month, Mrs Banda said she did not want Sudan's President Omar al-Bashir to attend an African Union summit Malawi is hosting in July.
She said she feared the "economic implications" if Mr Bashir visited the country in defiance of an arrest warrant issued by the International Criminal Court on war crimes charges over the conflict in Darfur.
Relations with donors have already improved under Mrs Banda and the UK, which had been extremely critical of Mr Mutharika, is now urging other donors to restore funding as soon as possible.
Malawi is one of the poorest countries in the world and aid used to make up a large proportion of the national budget. By A Web design Company
By A Web design Company