Britain on Monday downgraded its threat level from "critical" - the highest - to "severe," while US followed suit by lowering it from "red" to "orange" for incoming flights from Britain.
The threat level for all other flights also remained at orange, the second highest level, the US Department of Homeland Security said in a statement.
Authorities in Britain were quick to point out that the new threat level still indicated that a terrorist attack is "highly likely," but is a step down from the "imminent" threat that has characterised Britain's state of readiness since Thursday.
Britain was put on its highest alert after authorities on Thursday allegedly foiled a plot to hijack planes flying from Britain to the US and blow them up over the mid-Atlantic. Around 24 people were arrested in a raid.
"There has now been time to assess the intelligence picture following the police operation," British Home Secretary John Reid said in a statement. "The police believe that the main suspects in the alleged plot were arrested last week."
Reid had on Sunday said that members of the group that planned Thursday's attacks could still be on the loose, and that further attacks were still likely, in an interview on British broadcast channel BBC.
But in the statement on Monday, Reid pointed to the possibility of other terror plots against Britain. "I want to stress ... that the change in threat level does not mean the threat has gone away," Reid said. "There is still a very serious threat of an attack."
US Homeland Security Secretary Michael Chertoff echoed Reid's remarks in his own statement, also warning that the threat of attack was still very real.
"Let me be clear: this does not mean the threat is over," Chertoff said of the US downgrading.
In a sign of how tense the situation remains, an early morning British Airways flight from London's Heathrow Airport was turned around by the pilot, after a mobile phone sounded on the plane, media reports said.
The plane was turned around in mid-air after the owner of the mobile phone could not be found.
Reid's statement on Monday did not say how the reduced threat level would affect security at British airports, which have been plagued by heavy delays - the result of strict security measures - since the plot was uncovered on Thursday.
Chertoff's statement said that a ban on liquids and gels in carry-on luggage remained in full effect at all US airports.