Foreign Secretary William Hague has warned that foreign supporters of democracy must not slacken pressure on Burma's military-backed government while reforms remain incomplete.
Mr Hague is the first British foreign secretary to visit Burma in more than 50 years.
Speaking after a meeting with Aung San Suu Kyi, head of the country's democracy movement, he said that while reforms undertaken by elected president Thein Sein raise hopes that democracy and freedom are within reach, the measures taken so far are insufficient.
"I hope we are at a stage where we can say that a long-held dream now has a chance of being realised," he said - but added much more must be done, saying: "It is not possible to say a country is free and democratic while people are still in prison on grounds of their political beliefs."
Britain and other nations instituted political and economic sanctions against Burma because of repression by the previous military regime, and these pressures should not yet be lifted while political prisoners are still being held, Mr Hague said.
Thein Sein's government, which came to power last year after elections in 2010, has released about 200 political prisoners, legalised trade unions and eased some restrictions on freedom of expression.
However, it still holds some 600 to 1,700 political activists, some on long prison sentences, and critics fear that liberalisation and dialogue with Suu Kyi's democracy movement are minimal gestures aimed at appeasement.
Ms Suu Kyi and her National League for Democracy party, however, have virtually endorsed the reform process by rejoining mainstream electoral politics after years of resistance to military rule. The NLD won 1990 elections but the ruling junta detained Ms Suu Kyi and other NLD figures for years and refused to allow parliament to be seated.
Burma did not hold another election until November 2010, and the rules set by the military maintained its dominance in parliament and government. The NLD boycotted that election and was delisted as a result, but it was reinstated by the government on Thursday, in time to run candidates in a by-election on April 1.
Ms Suu Kyi, speaking alongside Mr Hague after their meeting, said he had reflected her movement's themes and aspirations exactly.