"This morning the Holy Father Benedict XVI visited Paolo Gabriele in prison in order to confirm his forgiveness and to inform him personally of his acceptance of Mr Gabriele's request for pardon," the Vatican said in a statement.
Gabriele's pardon was a "paternal gesture" for a man "with whom the pope shared a relationship of daily familiarity for many years".
However, the ex-butler "cannot resume his previous occupation or continue to live in Vatican City," it said.
Gabriele was found guilty in October of leaking sensitive memos to the press as part of a whistle-blowing campaign against what he said was "evil and corruption" in the Vatican.
Paolo Gabriele was a whistleblower against what he said was "evil and corruption" in the Holy See.
A married father-of-three who lived inside the Vatican as one of the 594 citizens of the world's smallest state, Gabriele was born in Rome and started out as a cleaner in the Secretariat of State – the main administration of the Catholic Church.
Gabriele then worked as part of the domestic staff of late pope John Paul II before being promoted in 2006 to the prestigious post of butler to the pope – a position that gave him unique access for a layman to the pontiff himself.
But he was suspected of using his position to steal secret Vatican papers and was put on trial and convicted in October. He said he acted "out of love for the Church of Christ and of its leader on Earth".
He had told the court he was innocent of the charge but acted because he felt the pontiff was being "manipulated".
"Concerning the accusation of aggravated theft, I declare myself innocent," he said, though he admitted: "I feel guilty for having betrayed the trust that the Holy Father gave me, whom I love like a son" loves his father.
Along with four women from the Memores Domini religious movement who help the 85-year-old pope in his daily life and run the papal household, Gabriele was one of the few lay members of what has been called the "pontifical family".
Gabriele accompanied the pope on his many foreign trips and can be seen in the corners of official photographs, adjusting the pope's cloak, holding his umbrella or escorting him on the "popemobile" through crowds of faithful.
The 46-year-old, nicknamed "Paoletto", served meals for the pope and helped him don his robes every day. His wife and children were well known and liked in the tiny Vatican community.
His co-defendant Claudio Sciarpelletti told investigators he knew about what he called Gabriele's "painful" childhood although no further details were provided in court documents.
"He was very pious. He went to the mass celebrated by the Holy Father every day and prayed a lot," said one of the four Memores Domini housekeepers.
But reports in the Italian press said Gabriele had a reputation for being a bit too talkative, considering the discretion demanded of his post.
Investigators asked two psychologists to analyse Gabriele while he was in detention and concluded that he was "an impressionable subject able to commit a variety of actions that can damage himself and/or others".
Omerta against the truth
Gabriele insists he leaked the documents for the pope's benefit.
"What really shocked me was when I sat down for lunch with the Holy Father and sometimes the pope asked about things that he should have been informed on," he told the court.
"It was then that I became firmly convinced of how easy it was to manipulate a person with such enormous powers."
His lawyer, Cristiana Arru, called on the judge to be lenient on a man who was driven by "a moral motivation" and who had by no means cooked up a "scheme or plot" aimed at damaging the Church or the pope.
His devotion to the pope and the written apology begging for his forgiveness moved the Vatican's presiding judge to cut his sentence from three years to 18 months.
The only recorded interview the butler has given was with Gianluigi Nuzzi, the investigative journalist who published the confidential Vatican documents that Gabriele leaked to him in the book "Your Holiness".
The butler expressed frustration with a culture of secrecy in the Vatican – from the mysterious disappearance of the daughter of a Vatican employee in 1983 to a quickly hushed-up double murder and suicide by a Swiss guard in 1998.
"There is a kind of omerta against the truth, not so much because of a power struggle but because of fear, because of caution," Gabriele said in the interview, using the term for the code of silence of the Sicilian Mafia.
He told Nuzzi he was acting with "around 20 other people" in the Vatican, though he later denied others had been actively involved in helping him.
Gabriele comes across in the interview as a deeply religious man who says he was inspired by the Holy Spirit to reveal intrigues behind the Vatican walls to help the pope rid the heart of the Catholic Church of corruption.
He said he was aware of the consequences of his actions but said the potential to change something in the Vatican was worth the risk.
"Being a witness to truth means being ready to pay the price," he said. – AFP.