Mr Mawdsley, 27, a Catholic human rights campaigner and university drop-out, has made it his life's mission to campaign against human rights abuses in Burma, one of the world's most repressive regimes.
He was arrested just over a year ago for carrying pro-democracy leaflets.
Last night the Foreign Office minister John Battle announced that the Burmese ambassador had informed him of Mr Mawdsley's imminent release and deportation to Britain. He is expected to arrive at the end of the week.
Mr Mawdsley has been kept in solitary confinement in Keng Tung prison in a remote part of Burma, 400 miles from Rangoon. His mother, Diana, a retired nurse who has been allowed to visit him occasionally, said that while she had been worried about her son's health and deteriorating eyesight, she supported him in his struggle.
Mr Mawdsley, the younger son of an educated middle class Lancashire family, had left university to campaign and was arrested when he entered Burma illegally from neighbouring Thailand in August 1999 to distribute 250 copies of his "Letter to the People of Burma".
The leaflet condemned the military junta and called for the immediate release of the pro-democracy campaigner Aung San Suu Kyi, who won a landslide victory against the junta 11 years ago and has been held prisoner ever since. During his trial, Mr Mawdsley refused to recognise the court.
His father, David, said that his son had used his imprisonment to highlight the continuing oppression by the military regime and its brutal purges against the Shan, Karen and Karenni peoples.
He said last night: "I'm de lighted. I'm choking up on this news. All the family are phoning each other up madly. It's just overwhelming, fantastic. It just shows the Burmese junta will listen when international pressure is strong enough.
"I'm so grateful to all the major bodies like the UN, and all James's supporters have been fantastic. It's such a relief."
The prisoner's twin brother, Jeremy, serving with the armed forces in Germany, said: "It's fantastic news. But it's one of those moments that I'd really like to see before I believe it as the Burmese junta like to play morale breaking games.
"He went out there to highlight the ethnic massacres perpetrated by the junta and he will want to remind everyone of that when he finally gets home."
During the last year Mr Mawdsley's case attracted high profile support, including that of the Catholic peer Lord Alton of Liverpool and a number of US congressmen.
In statements - mainly is sued through his parents - Mr Mawdsley has attacked the British government for refusing to follow the US lead of banning investment in Burma.
Mr Battle said last night that the Burmese ambassador, Kyaw Win, had informed him that James was to be deported. "I am relieved that the Burmese regime has recognised that there is no justification in keeping James in prison and has decided to deport him as soon as possible."
There are 1,200 political prisoners in Burmese jails.
