Budanov was sentenced to 10 years in prison for killing 18-year-old Elza Kungayeva in Chechnya in 2000.
The decision came the same day the Mordovian Supreme Court postponed hearing an appeal for the release of former Yukos lawyer Svetlana Bakhmina.
Budanov has always maintained he believed Kungayeva was a rebel sniper and strangled her during an interrogation. The judge ruled that Budanov, who became a rallying figure for Russian nationalists, was eligible for parole because he had spent more than five year in pretrial detention and had demonstrated good behavior in prison.
Kungayeva's father, Visa, said he was shocked by the decision and would appeal to the European Court of Human Rights. Nurdi Nukhazhiyev, Chechnya's human rights ombudsman, also criticized the decision.
Vyacheslav Lebedev, chairman of the Federal Supreme Court, said he might personally intervene.
"I'm not ruling out considering the case myself," Lebedev told reporters in Krasnodar on Friday, Interfax reported.
"Budanov has admitted his guilt, repented, paid damages and served more than two-thirds of his sentence," said Vasily Zima, an aide to the Ulyanovsk regional prosecutor, Interfax reported.
The announcement of Budanov's release sparked a protest of more than 1,000 people in the Chechen capital of Grozny, Interfax reported.
Budanov's appeal for early release was his fifth, with all of his earlier requests being rejected.
He is eligible for release on Jan. 11.
The Mordovian Supreme Court, meanwhile postponed a hearing for Bakhmina's early release, Interfax reported.
"The session was postponed till Jan. 21, as the prosecution called for a detailed examination of the case," said Roman Golovkin, Bakhmina's lawyer.
Bakhmina is serving a 6 1/2 year prison term on charges of embezzlement and tax evasion. She gave birth to a daughter in a prison hospital on Nov. 28 and has already had two release appeals rejected.
n? A Moscow court sentenced former Yukos official Alexei Kurtsin to four more years in prison and handed down an additional fine of 1 million rubles ($34,500) on charges of embezzlement.
The former Yukos manager was convicted of embezzling 74 million rubles (almost $3 million). Kurtsin was was sentenced to 14 years in prison in December 2005.
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