The al-Jazeera correspondent has been in prison since December 29 last year after being caught in Egypt's campaign of mass arrests targeting the now-banned Muslim Brotherhood, as well as journalists, activists, students, and academics.

He was arrested with Mohamed Fahmy, al-Jazeera's bureau chief who holds dual Egyptian and Canadian citizenship, and producer Baher Mohamed, who is Egyptian.

Following a months-long trial that was dismissed as a farce by human rights groups and legal experts, the three were convicted on June 23 of conspiring with the Muslim Brotherhood – now listed as a terrorist organisation – to broadcast false news that damaged Egypt's international reputation.

They were sentenced to between seven and 10 years in prison and are all appealing their sentences. The appeal is scheduled to be heard on January 1.

The new law, announced by President Sisi on Wednesday, requires the general prosecution to request the transfer of the prisoners and for the cabinet to approve the request.

"This law was issued to uphold the interest of the state and to maintain the international image of Egypt," Presidency spokesman Alaa Yousef said in comments reported in the state-run al-Ahram newspaper on Wednesday.

Published in local media outlets across Egypt, the presidential decree reads:

"In light of international treaties pertaining to criminal extraditions, and the transfer of defendants sentenced in Egypt, the president is empowered – after having referred the case to the General Prosecutor, and after receiving approval from Council of Ministers – to hand over sentenced individuals to their states.

"This being for their trial, or for the execution of their sentence – according to each specific condition – in keeping with the higher interests of the state."

There has been enormous international pressure on Egypt to release the journalists, who are widely viewed to have just been doing their job and reporting fairly on the tumultuous events that have rocked the country over the last three years, resulting in the downfall of two presidents, including the Brotherhood-backed Mohamed Mursi in June last year.

Until last month, President Sisi insisted that he could not intervene in the Egyptian judicial process, which he described as "completely independent".

In October the tone of his comments shifted and he said the best way to deal with violations committed by foreign journalists was deportation, while still stressing he could not interfere with the judicial process.

It is understood Mr Fahmy, who is Egyptian-Canadian and youth activist Mohamed Soltan, who holds dual US-Egyptian citizenship, along with other jailed Egyptian-dual nationals, cannot be extradited to their second home countries.

In tweets quoting Fahmy posted by his family members, he said: "I wish my mate Peter Greste freedom after deportation law. Baher Mohamed and myself will fight until vindicated."

"Deportation law is a positive move even if it does not affect me. I am a patriotic Egyptian and would never drop my nationality."

Australia does not have an extradition treaty with Egypt for the transfer of prisoners.

Foreign Affairs Minister Julie Bishop said the Department of Foreign Affairs was examining the proposal.

"Our reading of the proposed Egyptian law will empower the president to transfer foreign prisoners back to their home countries," she said. "It appears to be a standard international prisoner transfer scheme in which the person convicted is still required to serve out the sentence in the home country.

"We are seeking clarification as to the implications for Peter Greste's case.

"In the meantime we are focused on making representations at the highest levels within the Egyptian government to ensure that Peter Greste is home as soon as possible."

Mr Greste's brother Andrew spoke at an Amnesty International event in London this week of the increasingly dangerous environment in which journalists are forced to gather news.

"As Peter has said and is now experiencing first-hand, journalists are high-value targets in areas of conflict and civil unrest around the world."

He made the trip to London after visiting Peter in Torah Prison, saying his brother was "extremely frustrated" but holding up well after 11 months in jail.

"Mentally he is a pretty tough bloke and I am immensely proud of the dignity he has displayed throughout the ordeal, but he has had to make a conscious effort to keep himself together, keep his mind active and is very determined that the experience of prison won't break him."

with David Wroe