Brazil's office of the attorney general said on Friday former president Luiz Inacio Lula da Silva could exercise his role as chief of staff after a court in Rio de Janeiro struck down a second injunction blocking his appointment.
President Dilma Rousseff named Lula as chief of staff on Wednesday, but soon after his swearing-in ceremony on Thursday, a federal judge in capital Brasilia suspended the appointment on the grounds it prevented "the free exercise of justice."
Lula was hugely popular when he stepped down five years ago at the height of an economic boom. But now he faces charges of money laundering in a case linked to a scandal involving state-run oil company Petrobras. He denies all charges.
Lula is likely to face more legal challenges to joining Rousseff's government as many Brazilians believe his appointment was made to grant him immunity from the charges.
In Brazil, cabinet ministers can only be tried before the Supreme Court.
State prosecutors in Sao Paulo filed for his arrest last week after charging him with money laundering for concealing ownership of a luxury seaside apartment.
They asked Judge Sergio Moro, who oversees a corruption investigation into Petrobras, to take over Lula’s case, saying the two cases are connected.
Judge Moro also publicised taped phone conversations on Wednesday showing Lula and Rousseff tried to influence prosecutors and courts in favour of the former president. Yet he stressed in his court filing that there was no indication those attempts resulted in inappropriate actions.
Rousseff on Wednesday defended Lula’s appointment, saying he was chosen for his experience.