Hosni Mubarak, Egypt's imprisoned former ruler, has been cleared in a corruption case by prosecutors.

Judicial officials told the AP news agency that a court on Monday ordered the 85-year-old be cleared in the case that alleged he embezzled funds for presidential palaces.

Mubarak, who was arrested after his overthrow in 2011, still faces charges in another corruption case where he is accused of accepting gifts from state newspapers, but he has already paid back the value of the gifts.

Mubarak is also awaiting retrial after appeals against his conviction and sentence to life in prison last year over his complicity in the deaths of protesters during the uprising.

Mubarak's lawyer, Fareed el-Deeb, told the Reuters news agency that the second corruption case would be settled swiftly. "All we have left is a simple administrative procedure that should take no more than 48 hours. He should be freed by the end of the week," Deeb told the agency.

Egyptian law does not compel his incarceration while he faces retrial over the protester deaths.

However, judicial sources told Reuters that he would spend another two weeks behind bars before a final decision was made on the outstanding corruption case against him.

His release could stir more political tension in Egypt, where at least 850 people, including 70 policemen and soldiers, have been killed since the army-backed interim government forcibly dispersed Muslim Brotherhood sit-ins in Cairo on Wednesday.

Mubarak is being held at Tora prison on the southern outskirts of Cairo, the same facility where leaders of the Muslim Brotherhood are being held after their arrest following the coup against Mubarak's successor, Mohamed Morsi.