The declaration, which was supported by members of the ruling Colorado party as well as by the opposition, opens the way for possible impeachment moves against the president.

General Oviedo was serving a 10-year sentence for plotting a coup against the previous president.

Earlier, Carlos Cubas, the brother of the president, resigned from the government in protest over the decision to free General Oviedo.

He is believed to sympathise with a rival faction of the governing Colorado Party, which has accused the president of acting illegally.

President and general: Close allies

President Raul Cubas was sworn in on Saturday

President Cubas issued a decree commuting General Oviedo's 10-year sentence to the three months he has already served only a few days after he took office on Saturday.

The general was the presidential candidate of the Colorado Party at the time of his jailing, but stepped down in favour of Mr Cubas, who won the election last May.

The BBC's South America correspondent James Reynolds says the two men are close allies and President Cubas has made it clear that freeing Mr Oviedo was an immediate priority.

Lino Oviedo is reported to have left the military barracks on the outskirts of the capital, Asuncion, was he was being held.