"We have considered arguments and authorities and we are of the view unanimously that we have the jurisdiction to hear the motion," Federal Court judge Malik Ahmad said, dismissing the objections of government lawyers on Tuesday.
The decision was an initial victory for Anwar's lawyers, who on Monday launched a final bid to clear his name completely, just days after the same court overturned his sodomy conviction and set him free after nearly six years in jail.
The lawyers asked the court to review its own decision in 2002 to refuse Anwar's appeal against his corruption conviction and six-year sentence, saying fundamental legal principles had been violated in his trial.
Government lawyers opposed the application, arguing that as the highest court in the land the federal court's decisions should be final and not open to endless review.
Anwar has already served the sentence for corruption, which alleged he abused his power to cover up allegations of sexual misconduct. But he is barred from entering politics until 2008 unless the conviction is overturned.
"We are happy, it is a good day for us," Anwar's lawyer Sankara Nair told reporters. "If we succeed then Anwar can hold a political position immediately. That is what we are gunning for."
The court adjourned around mid-morning and was due to resume the hearing in the afternoon. Nair said arguments could take two days.
"If we succeed then Anwar can hold a political position immediately. That is what we are gunning for"
Much of the argument in court was of a technical legal nature, but another of Anwar's lawyers, Karpal Singh, said it centred on the premise that the rejection of Anwar's appeal was flawed and must be quashed.
Anwar flew to Germany on Saturday for an operation on his spine, which he says was injured in a police beating after his arrest in 1998. He is expected to return in about three weeks.
Anwar was heir-apparent to then-premier Mahathir Mohamad before being sacked and later sentenced to a total of 15 years in jail on charges that he says were trumped up to prevent him challenging Mahathir for the premiership.