Australian journalist Peter Greste says the release of two Al Jazeera colleagues from an Egyptian prison is bittersweet, because the ordeal should never have happened in the first place.

Egyptian President Abdel Fattah al-Sisi pardoned jailed Al Jazeera journalists Mohamed Fahmy and Baher Mohamed, along with 100 prisoners, on Thursday morning (AEST), the presidency and official media reported.

Mr Fahmy, Mr Mohamed, along with Mr Greste, were sentenced in a retrial in August, for fabricating “false” news in support of the Muslim Brotherhood movement which the army removed from power in 2013 and outlawed.

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The pair were then released in what President Sis’s office said was “a goodwill gesture” on the eve of a major Muslim holiday, Eid al-Adha.

Mr Greste, who was also convicted but had been deported by presidential decree in February after 400 days in jail, said he was “overjoyed” by the news.

But he added that celebrations were muted.

“President Sisi has taken a very important step in restoring confidence in the system, but it is only a partial step,” Mr Greste told Al Jazeera.

“It is hard to celebrate though, as this whole episode should not have happened in the first place.”

It was not clear if Mr Greste was included in the pardon, with the Al Jazeera’s parent network still demanding all charges and sentences against its journalists be dropped.

In a tweet on Thursday (AEST), Mr Fahmy wrote: “AJ Staff is Free!”

“I am free! This time for real! Cops dropped me at CAC my old high school in my prison garb. Party Time! #FreeAJStaff“

He had abandoned his Egyptian citizenship to qualify for deportation, and was expected to leave Egypt for Canada.

Meanwhile, Mr Mohamed spoke to the ABC shortly after they were released.

“I’m absolutely happy, but so tired,” Mr Mohamed said.

The network’s acting director general, Mostefa Souag, spoke to Al Jazeera, and said: “We’re delighted for them both and their families.”

“It is hard to celebrate though as this whole episode should not have happened in the first place. They’ve lost nearly two years of their lives when they were guilty of nothing except journalism,” Mr Souag said.

“The case for seven journalists convicted in absentia continues. They may not be behind bars, but their families and careers have been affected immeasurably.

“We urge the Egyptian authorities to quash their cases and let them too get on with their lives.”

– with AAP

Mohamed Fahmy and his wonderful wonderful wife Marwa after his release outside his old highshool pic.twitter.com/5qKdkIkSG0

— Samer Al-Atrush (@SameralAtrush) September 23, 2015

President #Sisi just issued a Presidential Pardon releasing 100 of Egyptian activists including #aljazeera Reporter Mohamed Fahmy & others. — Egypt MFA Spokesman (@MfaEgypt) September 23, 2015

congratulations for my colleague and best friend @PeterGreste #To_be_an_Egyptian_is_not_a_crime #FreeAJStaff #FreeBaher

— Baher Mohamed (@Bahrooz) February 2, 2015