Jon Venables, 31, was freed after being jailed in 2010 for downloading child abuse images.
Venables had previously served eight years for murdering two-year-old James in Liverpool in 1993.
The killer has reportedly been given his fourth new identity at a cost of £250,000.
James's father, Ralph, believes Venables will commit further crimes, a friend said.
She said: "He is convinced he will reoffend."
She added that James's family were given scant information about the release and Mr Bulger was told via his lawyer.
The toddler's mother, Denise Fergus, said that Venables was "a danger to the public".
Venables was just 10 years old when he and his friend, Robert Thompson, tortured and murdered James after abducting him.
A Ministry of Justice spokeswoman said: "We do not comment on individual offenders.
"The re-release of life licensed offenders is directed by the Parole Board once it is satisfied they can be safely managed in the community.
"Their life licence lasts for the rest of their lives, and they may be recalled to prison at any time for breaching their conditions."