Mahathir said Anwar, who was jailed on sodomy charges in a conviction criticized as politically motivated, will be freed Wednesday.
Once a high flyer in the ruling party, Anwar was convicted of homosexual sodomy and corruption after a power struggle with Mahathir in 1998.
Last week, 92-year-old former Prime Minister Mahathir Mohamad returned to office after his opposition alliance won a majority in the parliamentary election.
"The Singapore authorities have cooperated extensively with their Malaysian counterparts on their past requests for information in relation to 1MDB-related transactions and are fully prepared to extend further assistance", the agencies said.
Members of the press gathered outside the Cheras Rehabilitation centre this morning to capture the historic moment as Anwar walked out as a free man at 11.30am today (16th May).
Malaysia's former opposition leader Anwar Ibrahim has been released from custody and pardoned.
From there, Anwar left for his home in Segambut, Kuala Lumpur where he expressed his gratitude to the King for pardoning him and to the prime minister for assisting with the process of his release.
Anwar had been recovering from a shoulder injury in hospital under police guard.
"The pardon timing is fast, and this speaks to the recognition that his conviction was unjust", said Bridget Welsh, a political science professor at the John Cabot University in Rome.
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Mr Mahathir kept the heat on his predecessor, Mr Najib, by releasing the summary of a critical audit report into 1MDB, the fund set up by Mr Najib.
Anwar, who needs to contest a by-election to become a member of Parliament, said he doesn't want any Cabinet posts yet as he plans to spend time with his family and travel overseas for speaking engagements.
"Mahathir has proven his tenacity, accepted his past limitations, apologised and sacrificed his time and energy to raise the dignity of the people", Anwar wrote to his supporters on May 8.
The 71-year-old PKR de facto leader was born on Aug 10, 1947, in Cherok Tok Kun, Bukit Mertajam, Penang.
Anwar was Mahathir's deputy in the 1990s but fell out with his mentor during the Asian financial crisis. In a statement on Sunday, Anwar reiterated his party's support for Mahathir's leadership but called for decisions to be made jointly.
The raid indicates that Najib's role in the 1MDB scandal is a key focus of the reopened investigation into the billions of embezzled funds. "Do your work if you want to become a minister", he said.
"Bury the hatchet? It's been a long time already", Anwar said, when asked about Mahathir. "There will be no special powers given except as are given to ministers or deputy ministers or deputy prime ministers", Mahathir said.
Mahathir has said he intends to run the country for "one to two" years before stepping down.