The decision to reinstate the controversial leader comes a day after his wife Swati Singh won the Sarojini Nagar in Lucknow.
Swati is also the head of the BJP women's wing. In February this year she approached Election Commission claiming threat to her life from SP candidate Anurag Yadav and his supporters. She had also filed a police complaint.
On July 20, 2016, Singh had alleged that Mayawati was selling party tickets for the assembly elections next year to the highest bidder. Here, he had made a derogatory comparison. He was arrested by Uttar Pradesh Special Task Force with the help of Bihar Police from Buxar on July 29 and lodged in Mau jail.
An FIR against Singh was registered on July 20 under the the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act and other provisions.
The complaint, which was lodged by national secretary of BSP Mewalal Gautam, alleged that Singh's remarks in Mau on July 20 hurt the feelings of BSP workers and the Dalit community across the country and were aimed at provoking them.
Referring to Singh's comments telecast on national TV channels, he said they were so derogatory that they could not be mentioned in the complaint and so a CD of the same was submitted before the court.
The BJP had already sacked Singh on the same day after the incident.
Singh had moved the Allahabad High Court for a stay on his arrest but got no immediate relief.
(With additional information from PTI)