"There is a presidential decision to deport Peter Greste to Australia," the official said.
Greste had been sentenced to seven years in prison along with a fellow Al-Jazeera reporter, Canadian-Egyptian Mohamed Fahmy, for allegedly aiding the blacklisted Muslim Brotherhood group.
Their Egyptian Al-Jazeera colleague Baher Mohamed was also sentenced to 10 years.
Local reports suggested Mr Fahmy would be deported to Canada within days but there was no word on the fate of Mr Mohamed.
Greste and Fahmy are eligible for deportation under a recent law enacted by President Abdel Fattah al-Sisi allowing the deportation of foreigners to stand trial or serve their sentences in their home countries.
There is no prospect that Greste or Fahmy would face trials in their home countries.
Mr Greste was arrested in December 2013 and imprisoned last June on charges that included spreading false news.
He and all of the defendants denied the charges against them and said their trial was a sham.
Egypt's president said in November he was considering the possibility of granting pardons to the two foreign Al Jazeera journalists.
In January, Egypt's top court ordered a retrial of all three men.
Al Jazeera welcomed Mr Greste's release and called on Egypt to also release Mr Fahmy and Mr Mohamed.
"Peter's integrity is not just intact, but has been further enhanced by the fortitude and sacrifice he has shown for his profession of informing the public," acting director of the Doha-based network, Mostefa Souag, said.
"We will not rest until Baher and Mohamed also regain their freedom.
"The Egyptian authorities have it in their power to finish this properly today, and that is exactly what they must do."
Andrew Greste said on Twitter it was "hard to believe" his brother was finally a free man, adding "Without the worldwide support we could not have got through it. @PeterGreste on his way home."
- AAP
New Zealand Media Freedom Committee welcomes release
New Zealand Media Freedom Committee has also welcomed the release of Mr Greste, a former Radio New Zealand correspondent.
Committee chair Joanna Norris said Mr Greste and his colleagues should never have had to endure their ordeal.
"The freedom of the media to report and publish views without fear of prosecution and violence is fundamental to a free and healthy society.
"Functioning democracies steadfastly recognise the benefit of these freedoms through legislation and actions that protect the rights of journalists.
"The three Al Jazeera journalists for jailed for simply doing their jobs. That is not acceptable."
- Herald Online
