Legislators in Zhejiang in eastern China passed a revision to the local rules on Monday making the change, the provincial legislature said in a statement.
China's National Health and Family Planning Commission confirmed to AFP that Zhejiang was the first province in the country to carry out the relaxation -- agreed by the country's Communist leaders at a key party meeting in November and approved by the national parliament three weeks ago.
Demographic experts are warning that the world's most populous country faces a labour shortage within the next two decades.
China's family planning policy was put in place in the late 1970s to control the country's booming population, and officials say it has been key to the country's rising prosperity.
Under the rule, most parents are restricted to one offspring, with exceptions to date including some rural families whose first child is a girl, ethnic minorities and couples where both are only children.
The policy has at times been brutally enforced, with authorities relying on permits, fines and in some cases forced sterilisations and late-term abortions, with pictures of the results causing horrified reactions.
Critics also argue that it has contributed to the gender imbalance in China, where sex-specific abortions remain common in a culture that prefers boys to girls.