"He has been ready since 1998," a reference to the first time Anwar was jailed.

Izzah told Fairfax Media her family was "deeply excited" and hoped his release would be "in the mere days to come".

"We expect a swift release but it is still customary to observe the royal pardon process."

Anwar was deputy prime minister for about five years in the 1990s during Mahatir's first spell as prime minister.

But the pair fell out spectacularly after Anwar emerged as a leader of a push to reform the country's political system. He was dismissed in 1998 by Mahathir, and then jailed for five years after a questionable conviction for sodomy.

After his release from jail, he led the opposition, which made significant electoral gains at the 2008 and 2013 elections, but he was jailed again on a second questionable sodomy charge in 2015 during the rule of just-ousted prime minister Najib Razak.

Anwar is due to be released from detention on June 8, but is banned from politics for five years by law. He is currently recovering from recent surgery in hospital.

However Mahathir - with Anwar's wife, new Deputy Prime Minister Wan Azizah Ismail, standing alongside him - said on Friday that King Muhammad V of Kelantan had agreed to an immediate pardon during a meeting at the Palace on Thursday.

"In the course of our discussion with the Agong [king] yesterday, the Agong has indicated … that he is willing to pardon Datuk Seri Anwar Ibrahim immediately. So we will go through the proper process of claiming a pardon for Datuk Seri Anwar," Mahathir said.

"It is going to be a full pardon which of course means that he should not only be pardoned, he should be released immediately when he is pardoned.

"After that he will be free to participate fully in politics," though he cautioned, "this process will take some time".

Wan Azizah was visibly shaken as Mahathir confirmed the man who had he once jailed would soon be free.

Indeed, Mahathir's decision to quit the party he once led, Barisan Nasional, and link up with the opposition bloc led by Anwar and Wan Azizah in order to blast Najib out of office is one of the most extraordinary stories in the unprecedented shake-up of Malaysian politics.

At the same media conference, Mahathir suggested his government would carefully examine allegations of rorting in the 1Malaysia Development Berhad (1MDB) sovereign wealth fund.

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Najib was cleared of wrongdoing by Malaysia's Attorney-General Mohamed Apandi Ali in 2016, but Mahathir said the attorney-general had  "undermined his own credibility, he has hidden evidence of wrong doing [at 1MDB], and that is wrong in law".

"Our intention is to go for people who have shown a tendency to be corrupt."

Mahathir has been careful to stress the new government is not seeking revenge, rather, it is seeking to enforce the rule of law.

Najib has been dogged by allegations of corruption relating to the fund he helped establish for years. The US Department of Justice has alleged he received $US681 million ($889 million) in stolen money from the fund, a claim Najib has denied.