An Egyptian court yesterday dismissed the murder charge against Mubarak over the deaths of protesters during the country's 2011 uprising.
Mubarak, who ruled Egypt for three decades until being driven from office, was also acquitted of a corruption charge but was expected to stay in jail on a three-year sentence in a separate graft case.
But his lawyer, Farid al-Deeb, told AFP that 86-year-old Mubarak could benefit from early release from the military hospital where he is being held.
"Under a recent legal amendment, there can be a release once two-thirds of a sentence has been served," he said.
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Yesterday's ruling dropping the murder charge enraged Mubarak's opponents, with about 1,000 people taking to a central Cairo square to denounce the government.
Police used tear gas to disperse the protesters and scattered clashes erupted, leaving two people dead and 14 wounded, according to a new toll provided by the health ministry.
At least 85 people were arrested but all except four were released, human rights lawyer Ramy Ghanem told AFP.
The Islamist leader was overthrown by the military last year and the Muslim Brotherhood was blacklisted as a terrorist group, making membership of the movement punishable by a prison sentence.
Morsi's ouster led to a deadly crackdown on his supporters that has killed hundreds, while thousands have been arrested and jailed.
Secular and leftwing activists have not been spared, with dozens jailed for violating a contentious law limiting the right to protest.