Foreign Minister Samuel Santos said President Daniel Ortega had ordered diplomatic relations reinstated after nearly a week of rancor over the killings of rebel leader Raul Reyes, El Nuevo Diario reported online.
Last week, Ortega said Colombia was guilty of "political terrorism" when its forces crossed the border to kill a leader of the Revolutionary Armed Forces of Colombia, or FARC, camped about one mile inside Ecuador.
Reyes was killed alongside some two dozen other members of the armed leftist group considered by Washington and Bogota to be a terror organization.
FARC rebels have been fighting Colombian forces for decades.
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