The decision comes as the leaders of the anti-establishment Five Star Movement (M5S) and the far-right League inch closer to a deal for a coalition government, just days after Berlusconi signalled he would not block such an agreement.
The Corriere Della Sera reported that a Milan court ordered the immediate "rehabilition" of Berlusconi on Saturday, which "cancels all the effects" of his 2013 tax fraud conviction -- including a ban on holding elected office.
The ban on the 81-year-old media mogul, who is notorious for his "Bunga Bunga" sex parties, had originally been until 2019 and the court's decision taken on Friday was made a month ahead of schedule, the newspaper added.
It means that Berlusconi would be able to again run for prime minister if coalition negotiations fail and new elections are called. But it may be too late as M5S and the League seem to be making headway in their talks.
A right-wing coalition including the League and Berlusconi's Forza Italia party won 37 percent of the vote in March 4 elections, while M5S became Italy's largest single party with nearly 33 per cent.
However, coalition talks were stalled for two months as M5S insisted the League, which led the right-wing coalition with 17 per cent of the vote, ditch Berlusconi and his party.
Dubbed "the immortal", Berlusconi dominated Italian politics for more than two decades, and despite sex scandals, serial gaffes and legal woes, he made an astonishing return from political oblivion for the March vote.
However, coming second to the League in his conservative alliance was a humiliating setback for Berlusconi, who was forced out of parliament in 2013 after being convicted of corporate tax fraud.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)