Schapelle Corby should go free before the end of this year after a correctional board approved her parole and reduced her sentence, officials said.
The parole recommendation was handed to prison officials on Friday and Schapelle Corby could be released from her cell in Kerobokan jail soon after all legal process and supporting documents are completed, said Bali's corrections board chief Ketut Artha.
Corby, 35, was convicted in May 2005 of smuggling 4.2 kilograms of marijuana onto the resort island of Bali and sentenced to 20 years in prison.
In 2010, she asked for clemency, citing her poor mental state and last year, Indonesia's president reduced her sentence by five years. It means, she has served two thirds of her sentence and was eligible for parole late last year.
But complicated bureaucracy and legal processes have been hampering her parole bid, Artha said. He expected Corby to be released before the end of this year to live with her sister in Bali.
Her case drew intense interest in Australia, where many people believe she is innocent.
"Corby has showed her good behavior while in prison, and villagers and local village officials are willing to accept her," Artha told reporters in Bali on the board's consideration over the parole.
"Her family in Bali is ready to guarantee her presence."
He said corrections officers visited the home of Corby's sister last Tuesday to assess whether it would be a suitable supporting place for her to live.
Corby was among 67,349 prisoners across Indonesia whose jail terms were reduced to mark Independence Day, which fell Saturday. Of those, 2197 were freed.
For this time alone, Corby had her sentence slashed by 6 months.
Another drug convict, Renee Lawrence, also 35, who is serving 20 years in Bali, had her sentence slashed by 6 months. She is one of nine Australians found guilty in April 2005 of attempting to smuggle 8.3 kilograms of heroin.
Six were sentenced to death and two others were given life imprisonment.
Eleven other foreign inmates there also had their sentence slashed, including two Britons each by 2 months.