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Parisse had his ban imposed by the French Rugby Federation (FFR) reduced from 30 days, plus 10 suspended, to just 20. It means his suspension will end on Friday, freeing him for Sunday's clash at Twickenham.
"Parisse will be re-activated as of Saturday so he'll be able to play against England," FFR Appeals Commission president Gilbert Chevrier told AFP.
Italy coach Jacques Brunel immediately restored Parisse to his squad, with the No.8 expected to join up with his team-mates on Wednesday night.
"We're satisfied to discover that Sergio Parisse's suspension has been reduced to 20 days and therefore he will be available for the next two Six Nations matches," said Italy team manager Luigi Troiani.
"Sergio is an important element in this group and we cannot be anything but delighted that he will be available to the coach Brunel, for the matches against England and Ireland."
The 29-year-old back rower had been banned after he was dismissed while playing for club side Stade Francais against Bordeaux-Begles on February 16.
The referee for that encounter Laurent Cardona accused the Argentine-born Azzurri star of insulting him in English, a charge that multi-lingual Parisse has vehemently denied.
He missed the Six Nations defeat to Wales in Rome on February 23 but will now be able to play in his country's last two fixtures, which he would otherwise have been banned for.
His charge has been reduced from 'insulting a referee' to 'failing in his captain's duties' -- Parisse was captain of Stade Francais that day.
As well as a 20-day ban he has also been given community service to perform.
Parisse has been capped 93 times by his country, scoring 53 points, and is widely considered one of the best No.8s in the world.
And this status was confirmed when, in a separate announcement Wednesday, the Barbarians revealed Parisse had been included as one of their five global stars recruited to play the British and Irish Lions in Hong Kong on June 1.
As well as Parisse, the initial calls-ups also included Italy prop Martin Castrogiovanni and France back-row forward Imanol Harinordoquy, with the Barbarians' backs set to include Samoa scrum-half Kahn Fotuali'i and Springbok centre Jaque Fourie.
The Hong Kong match will be the launchpad for the Lions' tour of Australia, with the Barbarians first playing England at Twickenham on May 26 before heading to the Far East.
The squad will be coached by Wasps director of rugby Dai Young.
The Barbarians are rugby union's most famous invitational side and selection to wear their black-and-white hooped jersey is considered one of the greatest honours in the game outside of a full international.