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Iran's judiciary is to rule by Friday on whether to release celebrated filmmaker Jafar Panahi on bail after his conviction was overturned by the Supreme Court, his lawyer said Saturday.

Panahi, 62, who has won a string of awards at European film festivals, was arrested on July 11 and had been due to serve a six-year sentence handed down in 2010 after his conviction for "propaganda against the system".

But on October 15, the Supreme Court quashed the conviction and ordered a retrial.

The Supreme Court of Iran quashed the six-year sentence against jailed film director , and the case was delivered to Branch 21 of the Tehran Court of Appeals for review.

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"Early this morning, judicial officials told me that they will make a decision about Panahi by the end of the week," his lawyer, Saleh Nikbakht, told AFP.

"Panahi's case had remained blocked in the courts since mid-October, but it was finally sent to the Court of Appeal on Monday to launch the legal proceedings.

"By law, he should immediately be released on bail and his case reviewed again," the lawyer said.

Panahi won a Golden Lion at the Venice Film Festival in 2000 for his film "The Circle". In 2015, he won the Golden Bear at Berlin for "Taxi Tehran", while in 2018, he won the best screenplay prize at Cannes for "Three Faces".

Panahi's conviction followed his support for mass protests in 2009 against the disputed results of that year's presidential election which saw populist Mahmoud Ahmadinejad win a second term.

As well as the six-year jail term, the court sentenced Panahi to a 20-year ban on directing or writing films, travelling or even speaking to the media. However, he has continued to live and work in Iran.

According to his lawyer, Panahi already suffered from health problems before his arrest and contracted a serious skin disease in prison.

Doctors say he needs to be treated "outside prison", the lawyer added.

Panahi's July arrest came after he attended a court hearing for fellow film director Mohammad Rasoulof, who had been detained a few days earlier.

Rasoulof was released from prison on January 7 after being granted a two-week furlough for health reasons, his lawyer told AFP.

Separately, a court ordered the release on bail of activist Arash Sadeghi, who was detained during mass protests in October against the death in custody of Masha Amini following her arrest for an alleged breach of Iran's strict dress code for women, the Etemad newspaper reported.