A three-judge court ruled John Hogan, 35, can return to Britain immediately, The Daily Mail reported.
Hogan, from Bristol, and his family were on vacation in Crete in 2006 when Hogan, after an argument with his wife, Natasha, killed 6-year-old Liam and then jumped from the fourth-floor balcony holding his daughter, Mia, 2, who also survived. The couple have divorced.
After learning he is to be released, Hogan hugged his mother and sister before he was taken back to the Athens Psychiatric Hospital.
At his trial last year, Hogan admitted his actions, saying he was seized by an "earthquake of psychosis." He was convicted but an appeals court reversed the verdict on the grounds of temporary insanity, recommending at least three years hospitalization.
Brian Chandler, Natasha's stepfather, said the family was worried Hogan might try to harm her or Mia. Natasha, who now uses the last name Visser, lives in Australia with a new husband.