In a statement on the club's website on Tuesday, chief executive Peter Storrie said: "We are delighted the transfer embargo for player registrations has been lifted by the Premier League.
"(Manager) Avram Grant will now be trying to bring in players to strengthen the squad in loan and free deals."
In a statement the Premier League said: "The board has taken this action as Portsmouth FC has no outstanding debts to football clubs as of this date".
Tuesday's development represents some long-awaited good news for the financially-troubled south coast club who have battled with problems on and off the pitch throughout the season.
They are facing a winding-up order in the High Court on Feb. 10 following a petition issued by the Government's Revenue and Customs office and could become the first Premier League club to go into administration.
