Tracey Connelly was jailed indefinitely with a minimum of five years in May 2009 for causing or allowing her son's death.
The Parole Board has recommended her release from prison following a second review of her case.
In a statement, it said: "We can confirm that a three-member panel of the board has directed the release of Tracey Connelly.
"The decision to release is a matter for the board, which is independent - arrangements and the date of the release are a matter for the Secretary of State."
Baby Peter died on August 3, 2007 with more than 50 injuries, despite being on the at-risk register and receiving 60 visits from social workers, police and health professionals over eight months.
Connelly admitted the offence and was given a so-called imprisonment for public protection (IPP) sentence, which carries a minimum term. An IPP sentence prisoner is eligible to be considered for release by the Parole Board when the minimum term is served.
When making its decision, the Parole Board will take into account the nature of the offence, the prisoner's offending history, the prisoner's progress in prison and any statements made on behalf of the victim.
Reports from psychologists, probation officers and prison officers are also taken into account.
Connelly will remain on licence for the rest of her life and if she breaches any of the conditions, she will likely be recalled to custody.
She was jailed with her boyfriend Steven Barker and his brother Jason Owen, who were convicted at trial of the same offence.