Vietnamese Prime Minister Nguyen Tan Dung announced the move in closing the East Asia Summit at the weekend - an event dominated by China's territorial disputes with its neighbours.
"In the centre of the Cam Ranh port complex Vietnam will stand ready to provide services to the naval ships from all countries, including submarines, when they need our services," Dung said, ending months of rising speculation about the highly strategic harbour.
He confirmed that Russian assistance would be used to rebuild port and repair facilities that could be hired out at market rates. Russia has already committed to building repair facilities as part of the US$2.2 billion deal to provide six Kilo submarines to Vietnam announced earlier this year.
Despite conciliatory remarks by Premier Wen Jiabao over the South China Sea at the summit, Beijing still faced continued diplomatic pressure to force a peaceful regional solution to the long-standing dispute.
And, in another potential blow to Beijing, the summit also formalised the long-planned invitation to Washington and Moscow to join the Association of South East Asian Nations' annual East Asian gatherings.
Once a repair facility is completed in Cam Ranh Bay, military analysts expect the US and other regional powers wary of China's rise to be frequent visitors
Built up by US forces at the height of the Vietnam war as a major air and naval base, a victorious Hanoi handed the port over to Moscow in the late 1970s as fraternal ties with Beijing degenerated into conflict.
The closest large port to the strategic sea lanes of the South China Sea and the disputed Spratly archipelago, the then-Soviet Union turned the harbour into its biggest offshore holding, keeping nuclear-powered submarines and an electronic spy base at Cam Ranh. The last Russians left in 2002.
Vietnam has long since insisted it would never allow another foreign base on its soil or foreign forces to attack others from the country; a pledge it repeats regularly in formal meetings with Beijing. But recently it has been exploring expanded naval co-operation with a range of powers; moves seen as countering China's assertiveness over its rival claims to the South China Sea.
And the future of Cam Ranh has been at the centre of such talks.
Currently only tourists land at Cam Ranh, attracted by the rapidly developing coastal resort of nearby Nha Trang.
Vietnam is eyeing formal naval repair and resupply agreements with the US, India and Russia - deals that would fall short of basing rights, but still see a significant rise of friendly naval visits to local waters.
The South China Morning Post in April reported that a 40,000-tonne naval supply ship, the USNS Richard E Byrd, was repaired in nearby Van Phong Bay - a move seen as a key early test of such co-operation.
Chinese officials have yet to comment on Dung's remarks, but a Xinhua report noted comments from a senior Russian official at the summit denying Moscow was in talks with Hanoi about creating a new Russian naval base. Other navies are also understood to be eyeing Cam Ranh, including Australia, South Korea and Japan.
"It is the hottest naval property around if regional naval co-operation is to improve in the face of the rise of China," said one Asian naval attache with close ties to the US security alliance. With a narrow entrance, deep harbour and protected by mountains, Cam Ranh has long been considered the finest natural harbour in East Asia. Even before the US normalised ties with Vietnam 15 years ago, senior US naval officials would drool over the prospect of returning to Cam Ranh.
"We're always on the lookout for a good port," one quipped, when asked about the former base on one of the first Pentagon missions to Vietnam since the end of the Vietnam war.
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