The Coca-Cola Combination Division II leaders, who play in the JFA Willis Cup final at Springfield on Tuesday night, have still, however, been fined £500 with £250 suspended until 2008.
Portuguese Club's appeal fee has also been returned and there is no further order of costs against them.
The Portuguese, who appealed against a ban preventing them playing from 23 October, were reported to the FA by the JFA after the club failed to answer a misconduct charge relating to a Charity Cup fixture against Jersey Wanderers at Les Quennevais in August.
Portuguese Club vice-president Nelio De Freitas said: 'This appeal result is good news for everyone in football.
Now this weight has been taken off our shoulders we can get back to playing and continue to get things right at the club.
The impending suspension has also been removed from our record, which is also fantastic news.
'Clubs in Jersey love the challenge of playing against the Portuguese and I'm delighted for everyone that we can now continue to do that.
The players are aware of the situation.
JFA vice-president Iain McKenzie had a meeting with them and reminded them of their responsibilities, and we thank him for that.
'JFA disciplinary secretary John Gasston has also given us a lot of support in this matter and we are also grateful to him for his assistance.' Combination president Tim Darwin said: 'We have supported the JFA's disciplinary committee is this matter and I concur with everything that Nelio De Freitas has said.
This is clearly a great result for football, providing Portuguese are true to their word and continue to get their administration right and improve their behaviour on the pitch.'