Sgt Danny Nightingale's wife Sally burst into tears as the ruling was delivered. The sentence was reduced to a suspended 12 months.
Sgt Danny Nightingale wins his appeal against sentence. He will be released immediately.
The appeal court judges have returned to deliver their ruling on the case of Sgt Danny Nightingale.
The judges have turned to his 18-month sentence. They say they can deal with that today.
The Lord Chief Justice said Danny Nightingale was a "quiet, tough and calm soldier" who saw service in Iraq, Afghanistan, Libya and Syria.
Sally Nightingale handed a petition signed by more than 100,000 people to the Royal Courts of Justice today asking them to quash her husband's 18-month sentence for illegally possessing a pistol.
This afternoon lawyers representing her husband Sergeant Danny Nightingale are due to ask appeal judges to analyse the case.
Sally Nightingale, the wife of SAS hero Sergeant Danny Nightingale, has told Daybreak that her children will find it difficult to wake up without their father on Christmas day.
An SAS soldier, sentenced to 18 months military detention for possessing a gun, is set to have his case heard by the Court of Appeal. Daybreak's Richard Gaisford reports.
An SAS sniper who was jailed in Essex for illegally possessing a pistol will challenge his conviction at a Court of Appeal hearing today.
Sergeant Danny Nightingale, 37, from Crewe, Cheshire, will also appeal against his 18-month sentence at a hearing in London, his solicitor Simon McKay said.
The SAS soldier detained for being in possession given to him as a present has told Channel 4 News he feels "let down by the system."
Speaking earlier today, Danny Nightingale said:
"It's hard, I now fully sympathise with the caged animal when you go to the zoo and see it pacing up and down and up and down against the side of a wall, that's pretty much where I am at the moment.
"I certainly hold absolutely no faith in the military court martial system."
Danny Nightingale, the SAS sniper jailed for illegally a pistol, has issued a statement in which he says he has been overwhelmed by public support.
I spoke to Sally who was very emotional but happy about the early appeal.
I have been trained to prepare for the worst so cannot allow myself to get optimistic about how things may unfold.
I remain overwhelmed by the public support - I've written thank you notes to over 200 people who have sent letters to me.
I obviously want to be back with my family as soon as possible but realise this is now a matter for the court next week.
We hope he'll be home for Christmas. That would be the best Christmas present ever.