Sunil Ratnayake was to be hanged for the December 2000 massacre in a case held up by previous Sri Lankan governments as an example of rare accountability over abuses committed during the conflict.

A court convicted him of murdering eight members of the Tamil minority, including a five-year-old and three teenagers.

They were killed as they returned to their bombed homes to salvage what was left of their belongings, and their bodies were found buried in a mass grave near an army camp on the Jaffna peninsula.

The Supreme Court unanimously rejected the officer's appeal and upheld the death penalty last year.

But President Gotabaya Rajapaksa had now "instructed the Ministry of Justice to release Sgt Ratnayake from prison", a spokeswoman for his office said.

Rajapaksa, a retired army officer, came to power in November promising to free military personnel jailed for a string of offences during the previous administration.

He and his brother Mahinda, now serving as prime minister, are adored by the island's Sinhala majority for spearheading the defeat of separatist Tamil militants to end the country's 37-year ethnic war in 2009.

The armed forces were internationally condemned for atrocities committed during the conflict, but Sri Lankan soldiers have seldom been tried in civilian courts.

Government troops are alleged to have killed at least 40,000 Tamil civilians in the final stages of the war -- an allegation the Rajapaksas have denied.

The Tamil National Alliance (TNA), Sri Lanka's main political party for the minority community, condemned what it said was an "opportunistic" decision to release Ratnayake.