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Jailed Malaysian reformist Anwar Ibrahim was granted a full pardon Wednesday and walked free from a hospital in Kuala Lumpur, capping dramatic changes in the Southeast Asian country since the government was ousted in an election upset last week.

Yesterday, Istana Negara Datuk Pengelola Bijaya Diraja Datuk Ahmad Dahlan Ab Aziz said Yang di-Pertuan Agong Sultan Muhammad V had consented that all procedures regarding the Pardons Board proceedings on Anwar be finalised tomorrow. He has been in hospital for a few months recovering from a shoulder operation.

Xavier Jayakumar, a member of parliament with Anwar's Parti Keadilan Rakyat, called it "a momentous day for all of Malaysia".

Anwar's prison sentence ends June 8, but without a royal pardon he would be barred from politics for five years.

Mahathir, who is now prime minister for a second stint, had vowed to enable Anwar's release and eventually step aside for him to become the prime minister. The 70-year-old Anwar is still serving a five-year jail term after he was found guilty on a sodomy charge in 2015.

After having the conviction overturned in 2004, Anwar became a leading figure in the opposition, a movement that ultimately toppled the 60-year rule of the United Malays National Organisation (UMNO) led coalition on Wednesday.

"(In) an initial stage, maybe lasting one or two years, I will be the prime minister", Mahathir told a Wall Street Journal conference in Tokyo via a video link from Malaysia.

Anwar was heir-apparent to the premiership until Mahathir sacked him in 1998 and he was subsequently jailed.

In the WSJ report, Dr Mahathir said Anwar would be one of four party leaders in the ruling coalition and wouldn't be given any "special powers". "We will be able to charge him".

Mahathir has named just three ministers so far in addition to himself and Anwar's wife, Wan Azizah Wan Ismail, as deputy prime minister.

The volatile relationship between the duo has dominated the country's political landscape for over three decades.

It was a shared desire to remove scandal-ridden former-PM Najib Razak that forged the unlikely alliance between Anwar and Dr Mahathir, who came out of retirement to bring down his former protege.

"I think we need to let Mahathir do his work to save Malaysia and to get back its system of government".

"The base case is that Mahathir passes the baton to Anwar".

Najib denies any wrongdoing in connection with losses at the fund.

Najib is accused of misappropriating billions of dollars through his pet project state fund 1Malaysia Development Berhad (1MDB), and making deposits into his private accounts worth up to $1 billion.

The head of Malaysia's anti-corruption watchdog resigned on Monday, while attorney-general Mohamed Apandi Ali was put on leave as Mr Mahathir moved to step up the investigation into allegations of corruption at the 1MDB fund, which has attracted the attention of prosecutors and regulators around the world.

The former prime minister has been blocked from leaving the country and a complaint has been filed against him to the Malaysian Anti-Corruption Commission alleging he personally blocked an investigation into the US$3.2bn 1MDB scandal.