Bashir was the the spiritual leader of the terror group Jemaah Islamiyah, which committed the 2002 Bali bombings that killed 202 people including 88 Australians.

Australia urged Indonesia last March against any leniency for Bashir, after a push for him to be granted early release by the President gathered steam but then came to nothing.

Nearly a year later, President Widodo confirmed late on Friday that Bashir's release was imminent.

The decision to grant the convicted terrorist early release is very controversial and has already drawn strong criticism from an Australia who lost friends in the Bali bombings.

And while the move may win Widodo favour with some conservative Muslim voters ahead of the April 17 presidential election, it will likely also be greeted with dismay and protest by some of Indonesia's allies, including Australia, in the fight against Islamic extremism.

Bashir was initially convicted of conspiracy over his role in the 2002 Bali bombings but his conviction was overturned after he had served 26 months' jail and he was released in December 2006.

The 81-year-old was later convicted in 2011 of inciting terrorism and financing an Aceh-based terrorist cell and has served nine years of his 15 year sentence, meaning if released early, it will shave six years off of his sentence

In a statement to Kompas.com, the President said he had agreed to the early release of the convicted terrorist.

"It's based on humanitarian grounds because he's aging. Also his health," Widodo said.

The President confirmed his decision came after discussions with legal expert Yusril and a range of other senior figures in the government.

"We have considered it for a long time, since the beginning of last year involving the national police chief [Tito Karnarvian], the Coordinating Minister for Political, Legal and Security Affairs [Wiranto] and [legal] experts, and lastly with Professor Yusril."

Australian Jan Laczynski lost five friends in the bombings at the Sari Club in Bali and narrowly avoided being at the venue himself.

"Stunned that he is about to be released," he said.

"Truly devastating news as effectively he gets on with his life whilst everyone else suffers from seeing him walk out of jail," he said.

It is not yet clear what, if any, conditions will be placed on Bashir after his release - or whether he will be granted parole, or a full release and pardon.

Bashir's lawyer, Muhammad Mahendradatta, said he wanted Bahir's release to be without any conditions, enabling him to meet supporters and give sermons.

Yusril Ihza Mahendra, who is a legal advisor to the Widodo-Ma'ruf Amin presidential campaign team and who is also the chair of the Islam-leaning Crescent Star Party, claimed that Bashir accepted there would be conditions on his release and that he would do nothing except rest and be close to his family.

Earlier on Friday in a post on Facebook, Yusril claimed to have convinced the President to agree to the release of Bashir next week.

"Abu Bakar Bashir has been in prison for nine years of a fifteen year sentence handed down to him. It is time for Bashir to be released without burdensome conditions. Jokowi believes that Bashir must be released due to humanitarian considerations.

"Bashir is now 81-years-old and in declining health. Jokowi confirmed to Yusril that he was very concerned about the situation of Ustadz [Islamic leader] Abu Bakar and therefore asked Yusril to study, talk to and meet Abu Bakar Bashir in Mount Sindur prison.

"All talks with Bashir were reported by Yusril to Jokowi, so he was sure that there was enough reason to release Bashir from prison. Bashir is to be released next week" after paper work has been completed.

"After being released, Bashir will return to [the city of] Solo and will live in the home of his son, Abdul Rahim."

Yusril had visited Bashir in the Mount Sindur prison, which is in Bogor, West Java, on Friday and the Facebook post was uploaded a few hours later.

Ade Kusmanto, a spokesman for Directorate-General of Corrections had earlier said he could not confirm Yusril's claim that Bashir would be released from prison next week.

He noted that on December 13, 2018, Bashir had served two-thirds of this sentence, which is one of the conditions for receiving parole.

But Bashir had not met all conditions required for parole, such as signing a written statement that he would not repeat his crime, he said, and nor had Bashir or his family or his lawyers filed for clemency.

In 2014, while in jail, Bashir pledged allegiance to the Islamic State though he later walked away from that pledge.

with AP