Law minister has ordered that Singh be released immediately from jail and sent to India.
Sarabjit Singh, who was convicted for alleged involvement in bomb attacks in 1990 in Pakistan, has been in Kot Lakhpat Jail in Lahore for the last 22 years.
The orders of were issued by Pakistan President Asif Ali Zardari in a move that seems to reciprocate the recent release of Pakistani virologist Khalil Chishti by India, sources said.
Chishti, who was convicted of involvement in the murder of a man in Ajmer in 1992, was recently freed on bail by India s Supreme Court.
Sarabjeet had filed five clemency appeals. The fifth appeal that was filed by him last month included a document with the signatures of 100,000 Indians.