It means a host of star players won't be at risk of missing the second leg in Sydney through suspension if they receive cautions during Saturday morning's (AEDT) match in San Pedro Sula.
"This decision is a victory for Fair Play," said Football Federation Australia chief executive David Gallop in a statement.
"We thank FIFA for considering this exceptional circumstance and making their decision.
"This decision will allow both teams to field their best players, on even terms, for these extremely important play-off matches which is what all football fans want to see."
It's understood that FFA officials have been lobbying FIFA for a month to make the ruling.
The chief of Honduras football claimed at the weekend his players would receive a clean slate, but not the Socceroos, sparking widespread confusion and controversy.
Under FIFA's disciplinary code, each confederation can request FIFA to cancel cautions once during any competition.
The Asian Football Confederation asked FIFA to do so after the second round of qualifiers, while CONCACAF had not done so until now.
However, FIFA's disciplinary committee opted to erase all of Australia's single cautions after considering the "disproportion" in matches played in the qualification process in comparison to Honduras.
The play-offs will bring Australia up to 22 games played in qualifying, compared to 18 for Honduras.
The news will come as a huge relief to coach Ange Postecoglou, who can now instruct his players to approach the match normally, without having to worry about the implications of a ban for one yellow-card offence.
Recalled captain Mile Jedinak, key players Tom Rogic, Tomi Juric and Massimo Luongo, as well as Ryan McGowan, Jackson Irvine, Milos Degenek and Josh Risdon were among those in the gun prior to FIFA's adjudication.
However, Mark Milligan and Mat Leckie's suspensions for the opening tie will still take effect.