Manuel Pellegrini's side were handed the ban by the governing body in December because of unpaid bills, but following the decision to halve that punishment they will only be unable to compete in continental competition for one season should they qualify within the next four years.
However, Pellegrini's men sit sixth and are primed to qualify for next season's UEFA Europa League, and La Rosaleda outfit keen for the ban to be removed completely after lodging appeal with the Court of Arbitration for Sport.
A statement on the club's website read: "Malaga Club de Futbol received an official communication from UEFA today, Thursday May 16, stating that the financial control committee has confirmed, after analysing the situation surrounding the Martiricos outfit at as at March 31, 2013, that they are revoking the second year sanction imposed on the club.
"This resolution, together with the approval of the UEFA licence application for 2013-14, means that Malaga Club de Futbol is now just awaiting a decision by the TAS (Court of Arbitration for Sport) – taking pace on June 4 – to determine whether the club can take part in European competition next year, if they achieve qualification at the end of the league season."
The news was greeted positively by the club's general manager Vicente Casado, who believes the decision confirms the UEFA Champions League quarter-finalists are financially viable.
He said: "This decision and the granting of the Licence confirms what the Club has maintained since the beginning, when our compliance with regulations was first in question.
"We've worked, and will continue to work as hard as we can, as we're very optimistic about the future."
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