The IFA was threatened with a 12-month ban if, by midnight on Thursday, FIFA had not received official confirmation that the Iraq government had overturned an earlier decree.

The IFA, along with the country's Olympic committee and all other sporting bodies, was dissolved by the Iraqi government last week prompting FIFA's ruling.

However, on Tuesday, FIFA received a letter from the General Secretariat for the Council of Ministers of the Republic of Iraq, confirming that the IFA had been 'excluded' from the decree.

The decision means Asian champion Iraq is free to play its Group One World Cup qualifier with Australia in Brisbane on Sunday, before hosting the Socceroos in Dubai six days later.

"This is a victory for all the parties and mainly for Iraqi football," IFA member Tarek Ahmed told PA Sport.

"The talks between Iraq FA president Hussein Saeed and the general secretary of the council of ministers Bassam Al Hussain produced a decision to lift the suspension yesterday."

"FIFA made the decision official today and I think that this is a decision for the good of Iraqi football and hopefully we can learn from it."

In a statement, FIFA described the letter from the Iraq government as "a positive step" but the world governing body, which is in Sydney for FIFA's annual congress, still has misgivings.

"It does not fully answer all of FIFA's concerns about the governmental attempts to control the Iraqi federations and the Iraqi National Olympic Committee," the statement read.

FIFA will seek to meet with the Asian Football Confederation, the IFA and representatives of the Iraqi government in Zurich as soon as possible to clarify all outstanding issues and reserve the right to re-impose the suspension immediately.

The meetings will also be used 'to ensure that the Olympic Charter is applied to the entire Iraqi Olympic and sporting movement'.

Ahmed expects all groups to work together for the issue to be permanently resolved.

"As for the fact that the decision was conditionally lifted, I think that all the parties, whether Iraq FA or the government, are willing to follow the conditions of FIFA and hopefully the whole issue will be resolved once and for all soon," he added.

Football Federation Australia chief executive Ben Buckley welcomed the ruling.

"This is great news," he said.

"We're truly delighted that the Iraqi Government, the Iraq FA and FIFA have sorted out the issues between them and the Socceroos and Iraq can get on the field to play this important World Cup qualifying match on Sunday."

"It has always been our hope that the games could go ahead as they are critical matches in Australia's World Cup qualification preparation, and playing football is what we're here for."

The fixture is crucial to both Australia and Iraq's hopes of qualification.

The teams have experienced contrasting fortunes so far, with Australia top of the standings without conceding a goal, while Adnan Hamad's side is currently bottom after a 1-1 draw with China and a 2-0 defeat to Qatar.

Victory in Brisbane would revive Iraq's hopes of qualification and Ahmed believes the pressure will now be off the national team.