Starting Tuesday, restaurants and places of worship in parts of the world's fourth most populous country will be able to operate at 25 per cent capacity and shopping malls at 50 per cent, Widodo told a virtual press conference.
"Since July 15, cases have fallen 78 per cent. The recovery rate is also higher than new positive cases," he said. "Seeing that several indicators are starting to improve, the government will consider making gradual adjustments to some restrictions."
For the first time since mid-June, Indonesia reported fewer than 10,000 new coronavirus cases on Monday. Daily deaths were also under 1,000 for the first time in more than a month.
While cases have declined in Jakarta and some parts of Java, the highly contagious Delta variant of the virus continues to surge on other islands in the Indonesian archipelago, including in parts of Sumatra, Kalimantan, Sulawesi and remote Papua.
Senior minister Luhut Pandjiatan told a separate press conference later on Monday that Indonesia's system of social mobility restrictions - called PPKM - will stay as long as the coronavirus remains.
The government will assess the situation every week or two and tweak the severity of the restrictions accordingly, he said.
"PPKM will continue to apply throughout the pandemic."
Covid-19 restrictions on the popular holiday island Bali meanwhile, will remain in place, Pandjiatan said, but could be eased in the coming weeks.
Earlier on Monday, Jakarta's deputy governor said that the Indonesian capital had reached herd immunity, as a majority of the city's residents were fully vaccinated.
Nationally, just over 11 per cent of the population have been fully vaccinated since the Southeast Asian nation began its inoculation programme this January.