Chelsea Manning, the US army soldier who became one of the most prominent whistleblowers of modern times when she exposed the nature of warfare in Iraq and Afghanistan, and who then went on to pay the price with a 35-year military prison sentence, is to be freed in May as a gift of outgoing president Barack Obama.

In the most audacious – and contentious – commutation decision to come from Obama yet, the sitting president used his constitutional power just three days before he leaves the White House to give Manning her freedom.

Manning, a transgender woman, will walk from a male military prison in Fort Leavenworth, Kansas, on 17 May, almost seven years to the day since she was arrested at a base outside Baghdad for offenses relating to the leaking of a vast trove of US state secrets to the website WikiLeaks.

Nancy Hollander, Manning’s lawyer, spoke to the Guardian before she had even had the chance to pass on to the soldier the news of her release. “Oh my God!” was Hollander’s instant response to the news which she had just heard from the White House counsel. “I cannot believe it – in 120 days she will be free and it will all be over. It’s incredible.”

Manning, 29, is a former intelligence analyst in Iraq who was sentenced in 2013 after a military court convicted her of passing more than 700,000 documents, videos, diplomatic cables and battlefield accounts to WikiLeaks. It was the biggest breach of classified material in US history.

In 2010, WikiLeaks worked with media organisations including the Guardian to publish material that offered unprecedented insight into the workings of US diplomacy. Among the files Manning leaked was a gunsight video of a US Apache helicopter firing on suspected Iraqi insurgents in 2007, killing a dozen people.

On a call with reporters, a White House official said repeatedly that the president believed Manning’s crimes were “serious” and “harmful to national security” but refused to label her a “traitor”.

Human rights groups welcomed Tuesday’s decision. Margaret Huang, executive director of Amnesty International USA, said: “Chelsea Manning exposed serious abuses, and as a result her own human rights have been violated by the US government for years.

“President Obama was right to commute her sentence, but it is long overdue. It is unconscionable that she languished in prison for years while those allegedly implicated by the information she revealed still haven’t been brought to justice.”

But the commutation was condemned by leading Republicans. Senator John McCain, chairman of the Senate armed services committee, described it as a “grave mistake” that he fears “will encourage further acts of espionage and undermine military discipline. It also devalues the courage of real whistleblowers who have used proper channels to hold our government accountable”.

McCain added: “It is a sad, yet perhaps fitting commentary on President Obama’s failed national security policies that he would commute the sentence of an individual that endangered the lives of American troops, diplomats, and intelligence sources by leaking hundreds of thousands of sensitive government documents to WikiLeaks, a virulently anti-American organisation that was a tool of Russia’s recent interference in our elections.”

WikiLeaks last year published emails hacked from the accounts of the Democratic National Committee and John Podesta, chairman of Hillary Clinton’s election campaign. US intelligence agencies concluded that the hacking was authorised by senior figures in the Russian government and intended to sow chaos and harm Clinton’s chances against Donald Trump. Assange has denied receiving the material from Russia.

Paul Ryan, the House speaker, said: “This is just outrageous. Chelsea Manning’s treachery put American lives at risk and exposed some of our nation’s most sensitive secrets. President Obama now leaves in place a dangerous precedent that those who compromise our national security won’t be held accountable for their crimes.”

Tom Cotton, a senator for Arkansas and a military veteran, said: “When I was leading soldiers in Afghanistan, Private Manning was undermining us by leaking hundreds of thousands of classified documents to WikiLeaks. I don’t understand why the president would feel special compassion for someone who endangered the lives of our troops, diplomats, intelligence officers, and allies. We ought not treat a traitor like a martyr.”

Responding to Cotton, a White House official said it was worth considering that the Republican supported the presidency of “someone who publicly praised WikiLeaks” and who “encouraged a foreign government to hack his opponent”, in reference to Trump.

Obama’s surprise move also raises questions over the future of WikiLeaks founder Julian Assange, holed up at the Ecuadorian embassy in London after claiming asylum. Two women in Sweden have accused him of rape and other sexual offences, which he denies.

In a tweet soon after Tuesday’s announcement, Assange thanked “everyone who campaigned for Chelsea Manning’s clemency. Your courage & determination made the impossible possible”.

He did not mention his earlier pledge that he would agree to US extradition if Obama granted clemency to Manning. But, Melinda Taylor, who serves on Assange’s legal team, said he would not be going back on his word. “Everything that he has said he’s standing by,” she told the Associated Press.

The White House insisted on Tuesday that Assange’s offer to submit to extradition if Obama “grants Manning clemency” did not influence the president’s action.

“The president’s decision to offer commutation was not influenced by public comments by Mr Assange or the WikiLeaks organization,” the White House official said on the call. “I have no insight into Mr Assange’s travel plans. I can’t speak to any charges or potential charges he may be facing from the justice department.”

Manning, who is a columnist for the Guardian, was the symbol of one of the harsher aspects of the Obama administration, as an official leaker who suffered a longer custodial sentence than any other whistleblower of modern times. She was one of several leakers who were prosecuted under the 1917 Espionage Act – with more individuals falling foul to that anti-spying law than under all previous US presidents combined.

The soldier has experienced some very hard times while in military prison. In 2010 she was transferred from Iraq and Kuwait to the military brig at Quantico, Virginia, where she was put through prolonged solitary confinement.

Manning, formerly known as US army private first class Bradley Manning, revealed after being convicted of espionage that she identifies as a woman. She has said she was confronting gender dysphoria at the time of the leaks while deployed in Iraq.

She has endured recent challenges with her morale and mental health, having attempted suicide on at least one occasion last year. The US military responded to that attempt by punishing her with further solitary confinement. She was not due to be released until 2045.

Jay Brown, communications director of the Human Rights Campaign, America’s biggest LGBT civil rights organisation, said: “President Obama has a strong record regarding the humane treatment of prisoners and a long commitment to LGBTQ equality. The decision to commute Private Chelsea Manning’s remaining sentence – after she served nearly seven years for her crimes – reflects that record. We hope Private Manning soon can access the care and treatment that she, and every transgender person, deserves.”

Obama has commuted the sentences of 1,385 individuals, more than any other US president. The White House official said more commutations are expected “most likely on Thursday”.

The official said the president believed six years in prison was sufficient relative to sentences given to others who committed similar crimes.

“Manning is somebody who accepted responsibility for the crimes she committed,” the official said. “She has expressed remorse for those crimes.”

Earlier on Tuesday, White House press secretary Josh Earnest was asked if NSA whistleblower Edward Snowden, currently living in Russia, could also be in line for a pardon. But Earnest argued that there are key differences between the two cases. “Chelsea Manning is somebody who went through the military criminal justice process, was exposed to due process, was found guilty, was sentenced for her crimes, and she acknowledged wrongdoing,” he said.

“Mr Snowden fled into the arms of an adversary and has sought refuge in a country that most recently made a concerted effort to undermine confidence in our democracy.”

Although the documents Manning provided to WikiLeaks were “damaging to national security”, Earnest said, those leaked by Snowden were “far more serious and far more dangerous”.

Snowden tweeted in response to the Manning decision: “In five more months, you will be free. Thank you for what you did for everyone, Chelsea. Stay strong a while longer! … Let it be said here in earnest, with good heart: Thanks, Obama… To all who campaigned for clemency on Manning’s behalf these last hard years, thank you. You made this happen.”

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