The 20-year-old man, from Blackburn, Lancashire, was aged 14 when he planned the strike in Melbourne for Anzac Day -- a national holiday honoring Australia's war dead -- according to CNN affiliates Seven News and Nine News. Because he was a minor, he can only be identified as RXG.
RXG recruited Australian co-conspirator Sevdet Besim, who was 18 at the time, to carry out the attack, in which a police officer was to be beheaded in front of thousands of people during Anzac Day celebrations.
The plan was ultimately uncovered and foiled by police, and both were arrested. Later that year, RXG was sentenced to life in prison for inciting terrorism overseas.
But on Monday, the Parole Board for England and Wales ruled that he could be set free, Seven News and Nine News reported.
"After considering the circumstances of his offending, the progress made while in detention, and the evidence presented at the hearings, the panel was satisfied that RXG was suitable for release," the board said in a statement.
RXG managed to convince Besim that he was much older and had a history of radicalism, and the pair set out the details of the attack in thousands of messages sent using an encrypted app.
But the plan was foiled, police say, when RXG threatened to behead teachers at his school in northern England -- prompting counterterrorism experts to crack the encryption code on his phone and find the messages.
Alerted by their counterparts in the United Kingdom, Australian police closed in on Besim in Melbourne. In 2016, Besim was sentenced to at least seven and a half years in prison, according to Seven News and Nine News.