Manchester City have been cleared to play in next season's Champions League by the Court of Arbitration for Sport.

City were handed a two-year ban from European competition in February after UEFA's club financial control body (CFCB) found they had breached club licensing and Financial Fair Play (FFP) regulations.

The CFCB said they had overstated sponsorship revenue in their accounts and in the break-even information submitted to UEFA for the period between 2012 and 2016.

However, CAS lifted the suspension on Monday, as it found City had not disguised equity funding as sponsorship and that most of the allegations against them were "either not established or were time-barred".

It did find they had breached Article 56 of the club licensing and FFP regulations by failing to co-operate with the CFCB's investigation. The club's initial €30 million fine imposed by the CFCB was reduced to €10m by CAS.

City welcomed the news as a "validation" of their position, while UEFA said that it and the European Club Association remain committed to the principles of FFP.

The system is intended to ensure clubs only spend what they earn, to ensure their long-term viability.

CAS said its final award and the reasons would be published in the next few days.

City, whose appeal to CAS was heard over three days last month, issued a statement welcoming "the implications" of the ruling.

The statement read: "Whilst Manchester City and its legal advisors are yet to review the full ruling by the Court of Arbitration for Sport (CAS), the club welcomes the implications of today's ruling as a validation of the club's position and the body of evidence that it was able to present.

"The club wishes to thank the panel members for their diligence and the due process that they administered."

UEFA said it "took note" of the decision, adding: "UEFA notes that the CAS panel found that there was insufficient conclusive evidence to uphold all of the CFCB's conclusions in this specific case and that many of the alleged breaches were time-barred due to the five-year time period foreseen in the UEFA regulations.

"Over the last few years, Financial Fair Play has played a significant role in protecting clubs and helping them become financially sustainable and UEFA and ECA remain committed to its principles.

"UEFA will be making no further comments on the matter."

The allegations against City - that the club were overstating sponsorship revenue - first surfaced in German magazine Der Spiegel.

The club immediately and vociferously denied the claims, but the investigatory chamber of the CFCB opened a case in March last year.

City launched an initial appeal to CAS to halt the investigation but in November last year that was ruled inadmissible, because the conclusions of the investigation were not known at that point. 

Listen to the RTÉ Soccer podcast on Apple PodcastsSoundCloud, Spotify or wherever you get your podcasts.