"The ban has been lifted. There was an (IOC) executive committee meeting early this morning," Rajeev Mehta, the Indian Olympic Association secretary general, told AFP.
An IOC spokesman confirmed the ban had been lifted, adding that India could now compete under its own flag at the Sochi Winter Olympics.
"The decision means Indian athletes can compete for their national Olympic committee. They can walk behind their national flag at the closing ceremony," IOC spokesman Mark Adams said.
"The Indian flag will be raised in the village, at a time to be announced," Adams added.
India's three athletes have been competing at the Games under the IOC flag as a result of the country's suspension.
The IOC froze India's membership in December 2012 after the national association in New Delhi elected a number of tainted officials to key posts.
The Indian Olympic Association (IOA) in December bowed to pressure and agreed to keep tainted officials out of the fresh elections.
But it rejected a request from India's sports ministry to hold the new elections before the start of the Sochi Games.
