Amble down any street in downtown Yangon and you will find groups of people clustered around impromptu literature bazaars, with piles of books and worn magazines stacked on tarpaulin mats spread out across pavements.

The Myanmese are passionate readers, and a thriving trade in well-thumbed banned books, exchanged under the table in teashops, has existed for decades. Look at people sitting in teashops, waiting at bus stops, standing in line at ferry terminals - almost invariably they will have their head in a book. What is new, however, are the types of book now publicly on sale in the city.

The nerve centre of the city's intellectual life and home to some of its best bookshops is 37th Street, in downtown Yangon.

The respected Bagan Book House has books by Aung San Suu Kyi on its shelves. U Htay Aung, whose father established the shop in 1977, says he only started to display books by "the Lady" about eight months ago. Bagan is an important repository of rare books on Myanmar, but wander in on almost any day and you will find its owner engaged in animated discussions over games of carrom (a board game in which pieces are sunk in pockets), with some friends munching on noodles and others sipping Mandalay Rum.

A sticker of Suu Kyi's National League for Democracy adorns one of the shelves - something that would have been unthinkable a year ago.

Further up the street, at New Vision bookshop, tomes by Suu Kyi and her independence hero father, Aung San, are proudly on display outside. This is a new freedom for U Hla Min Aung, who considers his role as owner of a bookshop to be akin to that of social reformer. The motto of New Vision is "individual development leads to national development".

Stacked floor to ceiling with precarious piles of books, one needs to tread with caution here: a misplaced elbow could result in a literary avalanche. The creaking shelves are loaded with rare first editions (suffering in the humidity), collections of colonial musings from British times and traditional fairy tales - as well as translated Jackie Collins titles. It is a chaotic treasure trove for any book lover or collector.

"Social reform is not a revolution, but rather evolution. It is a long march," U Hla Min Aung declares excitedly in a break between selling books such as the 1964 Engineers' Guide to Centrifugal Pumps, The Niti Literature of Burma and A Dictionary of Photography, which was published in 1889.

U Own Saw opened the OS Bookshop, another 37th Street establishment, just last year, after two decades of selling books on the streets of Yangon. The authorities stopped him from hawking because of "new rules to make the city beautiful", although pavement bookstalls remain a prominent feature.

U Own Saw is proud of his new shop and turns on the creaking ceiling fan in honour of my visit. Typical in Myanmar, most of his stock consists of photocopied editions, neatly bound into black hardback notebooks. The titles, handwritten on stickers attached along the binding, can be easily removed, allowing a reader to publicly consume books that may once have been considered questionable by the authorities. He sighs when asked why so many of his books are photocopied, and turns over the copied Penguin edition of George Orwell's Burmese Days he has in his hand.

"We do not have this money," he explains, gesturing to the price of £6.99 (HK$87).

THIS OPENNESS COMES after decades of strict censorship. Following the military coup in 1962, a Printers and Publishers Registration Law was enacted by General Ne Win, requiring all books, magazines, periodicals, songs and films to be submitted to the Press Scrutiny and Registration Division for approval before being printed or distributed. This effectively eradicated freedom of expression in literature and was the basis for the arrests and silencing of many writers and journalists. As The New York Times has reported, U Tint Swe, the former chief censor, was not-so-affectionately nicknamed "the literary torturer".

The August 20 lifting of the censorship laws happened with little fanfare; a post on a government website simply stated that "all publications in Myanmar are exempt from the scrutiny of [the] Press Scrutiny and Registration Division".

Referred to by The Myanmar Times as "a publishing spring", books that were previously unavailable are now everywhere. For example, The River of Lost Footsteps, about the country's magnificent history, by Thant Myint U, grandson of the late United Nations secretary general U Thant, was published in Burmese for the first time in April and is now freely available to purchase throughout the city.

Thant Thaw Kaung, chief executive of trading company Myanmar Book Centre, believes this opening up marks a significant step towards the country's democratisation. Up until five months ago, Thant Thaw Kaung was not permitted to import the Lonely Planet's guide to Myanmar due to the book's lengthy musings on the ethical issues surrounding travel in the country. He once had to recall and withdraw a Scholastic Encyclopedia after he discovered that the entry for human rights was accompanied by a photograph of Suu Kyi.

"I could have been arrested for that," Thant Thaw Kaung sighs.

According to Professor U Ye Htut, joint secretary of the recently established Myanmar Literature Admirers Society, easing of censorship will change the way writers write. Strict state censorship has meant Myanmese writers and their audiences have had to be well-versed in the devices of allegory, allusion and irony, allowing for political messages to be communicated and read "between the lines and behind the backs" of state censors.

The thirst for knowledge is, to a large extent, a direct result of government suppression. Accepting an honorary degree from Oxford University in June, Suu Kyi said books helped her through her time under house arrest. "They were a journey into the wider world - not the wider world just of other countries, but of thoughts and ideas."

In a country where words have long been the only weapon available to its people, it is not uncommon to see groups of older men squatting for hours on street corners, locked in competitive games of Scrabble.

The younger generation, meanwhile, are to be found wiling away their time online in one of the many internet cafes that have sprung up across the city. Since the internet firewall was lifted in September last year - opening up access to international and exile news sources, as well as to YouTube - young people have found their own way to "journey into the wider world".

The challenge now will be to pass on the rich culture of reading to a generation with myriad entertainment options available to them. It is a case of Facebook versus Flaubert.

U Win Nyein, editor-in-chief of literary magazine Shwe Amyu Tay, has employed a novel approach to the problem. He describes it as "sugar-coating literature for younger readers" by including celebrity gossip among the more serious literary short stories in his publication. Despite his efforts, circulation has dropped more than 40 per cent in the past five years.

"People appear to have less interest now that books are freely available," U Hla Min Aung observes, wryly noting, "It would perhaps be better for business if these books were to be banned again."