The 70-year-old was jailed on August 5 when a court sentenced him to three years for concealing assets after selling gifts he received while in office.
Following an appeal, the Islamabad High Court suspended the charges on Tuesday and ordered for Mr Khan to be released on bail.
“Our application has been accepted, and the sentence has been suspended,” his legal representative Naeem Panjutha said on messaging platform X, formerly known as Twitter.
“Arresting him in any other case will cause further damage to our national integrity and repute of judicial system,” said Pakistani politician Sayed Bukhari. “Let the innocent be free!” he wrote on X.
It comes after the Balochistan High Court quashed a sedition case against Mr Khan on Monday.
Prosecutors had failed to obtain the required consent from the federal or provincial government to lodge sedition charges, the court said in its order.
Earlier this month, Pakistan’s Election Commission had disqualified Khan from running for office for five years. Under Pakistan’s laws, no convicted person is eligible to lead a party, run in elections, or hold public office.
Since his ouster, Khan has said that his removal was a conspiracy by the United States, his successor Shehbaz Sharif and the Pakistani military — accusations that they all deny. Sharif stepped down this month after the parliament’s term ended. Meanwhile, Pakistan is facing deepening economic and political turmoil.
The upcoming vote has been complicated by an announcement by the election oversight body that elections must be delayed for at least three to four months because it needs more time to redraw constituencies to reflect the recently held census.
Under the constitution, a vote is to be held in October or November. Until then, caretaker Prime Minister Anwaar-ul-Haq Kakar is running the day-to-day affairs. Kakar has said that he will ensure the vote is held in a free, fair and transparent manner.