The decision announced Wednesday gives Katsav months of freedom. Convicted in December, he had been set to begin his prison sentence earlier this month.
Katsav was convicted of raping an employee when he was a Cabinet minister in 1998 and of sexual harassment involving two other women when he was president from 2000 to 2007.
He was sentenced in March, making him the country's highest ranking official ever ordered to prison.
Katsav, 65, has denied the charges, claiming he is a victim of a political witch hunt.