YANGON (AP) -- U.S. Secretary of State Hillary Rodham Clinton and Myanmar opposition leader Aung San Suu Kyi, two of the world’s most recognizable female leaders, pledged Friday to work together to bring democracy to Suu Kyi’s long isolated and repressive nation.

Wrapping up a historic three-day visit to Myanmar, Clinton held hands with Suu Kyi on the porch of the Nobel Peace Prize laureate’s lakeside home where she spent much of the past two decades under house arrest and thanked her for her “steadfast and very clear leadership.” The meeting was the second in as many days for the pair, who appeared to have bonded almost as sisters after a private, one-on-one dinner in Yangon on Thursday.

“You have been an inspiration but I know that you feel you are standing for all the people of your country who deserve the same rights and freedoms as people everywhere,” Clinton told Suu Kyi. “The people have been courageous and strong in the face of great difficulty over too many years. We want to see this country take its rightful place in the world.”

Suu Kyi has welcomed Clinton’s visit and tentatively embraced reforms enacted by Myanmar’s new civilian government. She thanked the secretary and President Barack Obama for their “careful and calibrated” engagement that has seen the U.S. take some modest steps to improve ties.

“We are happy with the way in which the United States is engaging with us,” she said. “It is through engagement that we hope to promote the process of democratization. Because of this engagement, I think our way ahead will be clearer and we will be able to trust that the process of democratization will go forward.”

As she did in the capital of Naypyidaw on Thursday, Clinton said more significant incentives will be offered but only if the government releases all political prisoners, ends brutal campaigns against ethnic minorities, respects the rule of law and improves human rights conditions.

Suu Kyi, whose National League for Democracy party won 1990 elections that were ignored by the then-military junta but now plans to run in upcoming parliamentary elections, endorsed that approach and called for the immediate release of all political prisoners and cease-fires to end the ethnic conflicts.

“If we move forward together I am confident there will be no turning back on the road to democracy,” Suu Kyi said, referring to her party, the government, the United States and other countries, including Myanmar’s giant neighbor China. “We are not on that road yet, but we hope to get there as soon as possible with the help and understanding of our friends.”

Suu Kyi, a heroine for pro-democracy advocates around the world, said Clinton’s visit, the first by a U.S. secretary of state to Myanmar in more than half a century, represented “a historical moment for both our countries.”

With U.S. assistance and pressure on the government, which is still backed by the military, she said she believed change was on the horizon for Myanmar.

“There have been times that Naypyidaw has weakened but I don’t think it has ever really broken,” she said.

Clinton’s meetings with Suu Kyi were the highlight of the U.S. secretary of state’s visit to the long-isolated country also known as Burma and forcefully underscored a U.S. challenge to Myanmar’s leaders: The new civilian government must expand recent reforms, including the release of political prisoners, to improve relations as it emerges from more than a half-century of repressive military rule.

“We believe that any political prisoner anywhere should be released,” Clinton told reporters on Thursday. “One political prisoner is one too many in our view.”

U.S. officials warned that even the modest incentives Clinton offered to Myanmar’s new leaders this week would come off the table if the country fails the political-prisoners and other tests of reform.

Clinton offered a small package of rewards for steps President Thein Sein and other leaders have already taken but said the U.S. was not ready to lift tough sanctions on the country. Removing some of those sanctions would require approval by Congress, where many lawmakers have criticized the Obama administration for rewarding Myanmar too quickly without enough evidence of change.

Clinton announced that Washington would no longer block enhanced cooperation between Myanmar and the International Monetary Fund that could lead to much-needed loans. She said the U.S. would also support intensified U.N. health and microfinance programs and resume bilateral counternarcotics efforts.

Those steps could be followed by an upgrade in diplomatic relations between the U.S. and Myanmar, Clinton said, although U.S. officials stressed that concrete action on American concerns must be completed first. The U.S. has not had an ambassador in Myanmar since the early 1990s and is represented now by a charge d’affaires.