President Abdulla Yameen approved an amendment to a law on entitlements for past presidents, one day after the government cancelled Nasheed's prison leave and said it expected him to return "expediently".
The 48-year-old former leader was jailed last year on controversial terrorism charges, but was allowed to travel to Britain in January for treatment after he fell ill in jail.
The government said changes to the law meant former presidents and their spouses are denied entitlements "if they are convicted of any criminal offence (committed) during their term in office".
The government, in a statement, said past presidents were normally entitled to an annual pension of USD 214,000 in addition to medical insurance and unspecified other benefits.
Nasheed became the first democratically elected president of the Maldives in 2008 and served for four years before he was toppled in what he called a coup backed by the military and police.
He was jailed for 13 years on terrorism charges relating to the arrest of an allegedly corrupt judge in 2012, when he was still in power.
The Maldives has suffered prolonged political unrest in recent years, seriously denting its reputation as an upmarket tourist destination.
The government initially extended Nasheed's prison leave to allow him to undergo surgery, but revoked the extension on Tuesday, although it has not given him a deadline to return.
The government said it "expects he will return expediently".
"The former president was given an extension to undergo surgery. As his lawyers have confirmed that there is no surgery scheduled, the extension was cancelled," it said.
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