Malaysia's jailed opposition leader Anwar Ibrahim scored a minor legal victory on Wednesday, as a court ruled that he can proceed with his bid to challenge the rejection of his petition for a royal pardon.

Anwar is seen as the biggest political threat to Prime Minister Najib Razak, who has been buffeted by allegations of graft and mismanagement mostly related to a multi-billion dollar scandal at state fund 1Malaysia Development Berhad (1MDB).

Anwar, a former deputy prime minister, has served nearly two years of a five-year sentence after the country's highest court upheld a sodomy conviction in February 2015, a charge the charismatic leader and his supporters say was trumped up.

The Court of Appeal ruled on Wednesday that Anwar can ask the Federal Court to determine if he has the constitutional right to legally challenge the Pardons Board's decision to reject his petition.

A date for the case to be heard in Federal Court has yet to be set.

Clemency is the only option left for Anwar, 69, to get out of prison and clear his name.

"I'm here for the big fight," Anwar told reporters in court before being whisked away by prison officers following the ruling.

Anwar's family requested a royal pardon shortly after his 2015 conviction. But it was rejected that year by the Pardons Board, which advises the king on candidates for clemency.

Last December, Anwar exhausted his final legal option for an acquittal after the apex court unanimously ruled that his application for a review of his conviction was without merit.

Anwar is widely expected to be released by mid-2018, as Malaysia grants a one-third reduction of jail terms for good behaviour. His prison term ends in 2020.

But the conviction disqualifies him from political office and from contesting the next election that must be held by 2018.