Fonseka, 61, was in detention since early February 2010 soon after he had unsuccessfully challenged President Mahinda Rajaspaksa in the snap presidential election of January 2010.
Rajapaksa is expected to free Fonseka within the next few days, Fonseka's wife Anoma told reporters. The presidential pardon would set him free from jail where he is serving a three-year term on a conviction in a different case.
Fonseka, who led the army to victory against Liberation Tigers of Tamil Eelam in the war, which crushed the Tamil separatist outfit, fell out with his commander-in-chief Rajapaksa after war victory.
The former army chief was arrested and convicted by both military and civil courts and stripped off military ranks in August 2010.
Served with a 30-month jail term beginning September 2010 Foseka was convicted again last November for breaching national security and handed a three-year sentence.
Rajapaksa ignored mass protests for his release including international pressure.
A United States green card holder, Fonseka was named a political prisoner in the US State Department's 2010 human rights report.