The ban was activated after Fifa ruled there was too much government interference in football affairs.
But Fifa reversed the decision after Greece's parliament voted in favour of an amendment to the offending laws.
England's friendly with Greece on 16 August, which is scheduled to be new coach Steve McClaren's first game in charge, should now go ahead as planned.
Fifa suspended the Hellenic Football Federation (HFF) on 3 July after concluding it did not comply with the world governing body's statutes which insist on the independence of football associations and their decision-making processes.
But Fifa met with the HFF and Greek government to discuss what could be done to see the suspension lifted.
As a result of those talks, the Greek Parliament voted on Tuesday to introduce an amendment to legislation governing sport.
The amendment states the HFF will now operate independently but it will lose government funding as a result.
Greek sports minister George Orfanos sent a copy of the new law to Fifa president Sepp Blatter on Wednesday.
"In view of this amendment, the Fifa emergency committee deemed that the federation is now in a position to respect the statutes and regulations of Fifa as well as those of Uefa," Fifa said in a statement.
"As a result, the suspension previously imposed on the HFF has been lifted."
Vassilis Gagatsis, the head of the the Greek federation, welcomed the Fifa decision.
"A new page is opening for Greek football and it will need a big effort from all of us to achieve progress for the sport," he said.
"In this effort we need everybody and we should all work together, in unity, and do whatever is humanly possible so that our football is further enhanced and receives international recognition."
Reigning European champions Greece will now be allowed to defend their title in 2008.