The High Court in Bangladesh has granted bail to former Prime Minister Khaleda Zia, her lawyers say.
Ms Zia has spent a year in prison on corruption charges. Officials say she should be released later this week.
The former PM is facing at least four charges of corruption following her arrest in September 2007 by the army-backed interim government.
She denies the charges. Last week, her son Tarique Rahman, who is also facing corruption allegations, was given bail.
"Now no further obstacle remains on her way to freedom," Ms Zia's lawyer, Rafiqul Haque said.
Officials say it might take up to two days to complete the formalities for the release of Ms Zia who heads the Bangladesh Nationalist Party (BNP) .
Ms Zia's arch rival, former Prime Minister Sheikh Hasina, was granted bail in June to travel to the United States for treatment of ear and eye complaints.
"We are happy that she (Khaleda) is being freed," said Zillur Rahman, acting head of the Awami League.
He said it was a "positive development" which would curb fears of violence ahead of polls due to take place in December.
Free and fair elections
Ms Zia maintains that she will not go abroad for medical help, preferring instead to receive treatment in Bangladesh.
The two ex-premiers and about 170 other key politicians, mostly from the BNP and Sheikh Hasina's Awami League, were detained in a huge anti-corruption drive after the army-backed interim government assumed power in January 2007 following months of political violence.
Over the past eight weeks more than 50 have been freed on bail while many others have applied to be released, officials said.
Analysts say that the releases are part of an effort to ensure that all the main parties, notably the BNP and Awami League, contest the elections.
Both parties - which alternated in power over 15 years up to 2006 - have threatened to boycott the elections, a development which diplomats say would seriously detract from the credibility of the vote.
The interim government led by former central bank chief Fakhruddin Ahmed has vowed to stage free and fair elections once the nation's political parties have been cleansed of endemic corruption.
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