He was planning to contest parliamentary elections which were due for January 22, but they have now been postponed indefinitely after a new caretaker administration took over after months of popular protests.
The former ruler sought a reprieve from the jail sentence, which was given by the lower court and confirmed by the high court earlier last year.
Ershad seized power in a bloodless coup in 1982 and was ousted in a people's revolt in December 1990.