"Fonseka's release is a possibility," the sources who did not want to be named said without giving any time frame. But Lankan media reports said the freeing of Fonseka may come about in coming days.
Colombo is facing intense international pressure to release Fonseka and according to media reports President Mahinda Rajapaksa might grant him a Presidential pardon.
Fonseka, 61, is currently serving the second of his jail terms, having already completed a 30-month sentence for misconduct in the Army procurement procedures. He got a six months reprieve for good behaviour.
The reports of Fonseka's imminent release came even as a Sri Lankan court set for May 31 his application for bail in the second case for harbouring army deserters.
Soon after leading the army to victory against the LTTE in May 2009, Fonseka tried to cash in on his popularity by running for presidentship in 2010, suffering a crushing defeat.
He was arrested and convicted by both military and civil courts and stripped off military ranks in August 2010.
Fonseka, though having spent months in jail has so far spurned pressure to tender an apology to Rajapaksa and branded his court convictions as a political witch hunt.
A US green card holder, Fonseka was named a political prisoner in the US State Department's 2010 human rights report.
