Rajapakse inked the papers on Friday evening and passed them to his chief-of-staff, his spokesman Bandula Jayasekera said.
“The papers will be sent to the Ministry of Justice on Monday,” Jayasekera said.
Fonseka unsuccessfully tried to unseat Rajapakse in the January 2010 presidential election. The two fell-out as to who should take credit to crush the Tigers in May 2009, that ended nearly four-decades of bloodshed.
Rajapakse on Thursday announced intentions to pardon his erstwhile military chief-turned main political foe, Fonseka.
On Friday, high court imposed one million rupee bail (8,000 dollars) on Fonseka in a case where he is accused of employing military deserters, his lawyer Saliya Peiris said. However, it was not immediately clear if Fonseka would have to stand trial for the offence.
The government detained Fonseka two weeks after his election defeat in February 2010, on charges of corruption relating to military purchases. He was convicted given a 30-month jail sentence in September 2010.
Last November, Fonseka was also convicted and sentenced to three-years in jail for saying that Tiger surrenders were killed on the orders of Rajapakse’s younger brother Gotabhaya, who is defence secretary.
He has appealed that verdict.
The former four-star general is currently being treated at a Colombo-based private hospital for a respiratory problem caused by injuries he suffered in a suicide bomb attack in April 2006.
Fonseka’s wife Anoma said Rajapakse had promised to clear her husband of all charges.
Rajapakse on Saturday rejected international demands that he withdraw troops from the island's former war zone, during his nationwide address to mark the Tigers’ defeat.
The president, who is also the commander-in-chief, said military camps couldn’t be dismantled as it would undermine national security in that island that is emerging from decades of ethnic bloodshed.
"Some are shouting 'remove camps, remove camps'," Rajapakse said. But "these camps are not in another country. We have troops elsewhere in the country as well".