© PAMatthew Hedges and his wife Daniela Tejeda
A presidential pardon was issued in Dubai with "immediate effect".
It came after British outrage over the jailing of one of the UK's citizens.
He was arrested in May during a two-week research visit with Durham University.
His imprisonment prompted academic institutions to cut ties with the United Arab Emirates.
Matthew's wife Daniela Tejeda said: "The presidential pardon for Matt is the best news we could've received. Thank you friends, family, media, academics, and the wider public for your undivided support - I've been brought back to life."
Key Events
09:19 UAE says 'powerful evidence' used to jail Hedges
Abdulla Al Naqbi, head of the Department of Legal Affairs for the UAE Ministry of Foreign Affairs and International Cooperation, previously defended his country's handling of the case.
He said: "Contrary to media reports, Matthew Hedges has been treated fairly and according to the constitution of the UAE.
"Compelling and powerful evidence was presented in court. That included information extracted from his personal electronic devices by expert forensic analysis techniques; evidence provided by UAE intelligence agencies; witness testaments and Mr Hedges own confession.
"The crimes Mr Hedges was accused of are extremely serious. For the UAE, like all countries, protecting our national security must be our first priority.
"We are proud to have a system of justice that gives everyone the right to a fair trial."
09:09 Hedges flying home 'very soon', Jeremy Hunt says
Mr Hedges could be released from prison "very soon", according to Foreign Secretary Jeremy Hunt.
He said the decision to give him clemency after being jailed for life last week was "bittersweet" as other UK nationals such as Nazanin Zaghari-Ratcliffe remain behind bars around the world.
Speaking to BBC Radio 4's Today programme about the 31 year-old, Mr Hunt said: "We never saw any evidence for these charges against Matthew Hedges, and we made that clear.
"And I think the UAE authorities to their credit have been willing to listen to us in the past few days."
He added: "But the main thing now is that they have made this very important gesture. Matthew Hedges is coming home, and everyone recognises that he has been through a very tough time, but that his wife Daniela, his wife has been to hell and back frankly, and she fought incredibly hard. And having met her last week, she is a very determined lady."
Asked how quickly Mr Hedges could be flying home, Mr Hunt added: "I think it could be very soon indeed."
09:02 'I've been brought back to life', wife says
Daniela Tejada has just written on Twitter: "The presidential pardon for Matt is the best news we could've received.
"Thank you friends, family, media, academics, and the wider public for your undivided support - I've been brought back to life."
Ms Tejada was in court when she watched him sentenced to life in jail.
09:00 Brit 'suffering from panic attacks in prison'
Mr Hedges wife Daniela told the BBC he was suffering panic attacks in prison.
She previously old the BBC: "He is not well. He mentioned that his panic attacks have become worse than they were before. However, he did say that he has access to a doctor.
"I wasn't allowed to know where he is, so still don't know anything about his whereabouts, and I think he's just absolutely terrified at the idea of having to spend the rest of his life behind bars for an offence he hasn't committed."
08:55 Academic's last moments with wife before imprisonment
Mrs Hedges wife Daniela Tejada previously spoke about her last memory of her husband before his imprisonment.
She said last week: "Seeing him shaking in court after being handed a life sentence and then being made to leave was beyond heartbreaking.
"We didn't even get to say goodbye."
08:52 Hedges pardoned on the UAE's 47th National Day
Mr Hedgewas granted a presidential pardon for the UAE's 47th National Day - the anniversary of the joining of the seven emirates on December 2.
The official Emirates News Agency reported: "The customary National Day Presidential pardon includes Mr Hedges as part of a tranche of clemency orders issued on the occasion of the UAE's 47th National Day anniversary.
"Mr Hedges will be permitted to leave the UAE once formalities are completed."
08:48 UAE says pardon protects 'longstanding' partnership with UK
UAE Minister of State for Foreign Affairs Dr Anwar Gargash saying: "His Highness the President's gracious clemency in the customary National Day pardons allows us to return our focus to the underlying fundamental strength of the UAE/UK bi-lateral relationship and its importance to the international community.
"It was always a UAE hope that this matter would be resolved through the common channels of our longstanding partnership. This was a straightforward matter that became unnecessarily complex despite the UAE's best efforts.
"The case against Mr Hedges was predicated on evidence secured from Mr Hedges' electronic devices; surveillance and intelligence gathering by UAE intelligence and security agencies; and evidence provided by Mr Hedges himself - including a corroborated account of asset recruitment and training and the confidential information being targeted.
"His recruitment and progress within a foreign intelligence service was authenticated to the court by UAE intelligence agencies."
© SkyThe pardon was announced at a press conference
Jeremy Hunt described the pardon as "fantastic news".
But he linked the case to that of British mum Nazanin Zaghari-Ratcliffe, jailed in Iran on charges of allegedly plotting to topple the Iranian regime.
Mr Hunt tweeted: "Fantastic news about Matthew Hedges. Although we didn't agree with charges we are grateful to UAE govt for resolving issue speedily. But also a bittersweet moment as we remember Nazanin &other innocent ppl detained in Iran.Justice won't be truly done until they too are safely home."
08:38 Wife welcomes pardon and says she 'can't wait to have him home'
Matthew Hedges wife issued a short statement after news of the pardon broke.
She said: "We welcome news of the presidential pardon and cannot wait to have Matt back home."
She previously spoke of the heartbreaking final encounter she had with her husband before being jailed.
08:32 Video 'shows Hedges confessing to being MI6 spy'
The pardon comes after Mr Hedges allegedly confessed to being an MI6 spy in a video.
Authorities in the UAE have reportedly released the video. It allegedly shows Mr Hedges, an academic, admitting he is working undercover for Britain's international spy agency.
The 31-year-old, who worked with Durham University, was jailed for life last week on spying charges. His family have denied wrongdoing and the British government condemned his imprisonment.
And his wife Daniela Tejeda accused the Foreign Office of putting diplomatic relations ahead of her husband's liberty.
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