Mr Straw said the decision was based on medical evidence that Biggs's condition had deteriorated and he was not expected to recover.
Biggs, who turns 80 this weekend, is severely ill in hospital with pneumonia and doctors have said there is "not much hope".
Last month Jack Straw rejected Biggs's application for parole on the grounds that the robber was "wholly unrepentant" about his crimes.
Biggs was rushed to the Norwich and Norfolk Hospital from his cell at Norwich prison on Tuesday and will remain on bed watch overnight.The three Prison Service staff watching him will be withdrawn tomorrow, once the licence for his release is finalised.
The decision means Biggs can celebrate his birthday on Saturday a free man. It will be 46 years to the day since the robbery.
Although, given his medical condition it is highly unlikely he will get to enjoy much of a celebration. After a series of strokes, he is bedridden, fed through a tube and barely able to communicate.
But for his devoted son Michael it must come as a slight relief that his father will not die in prison. Michael Biggs has reportedly said: "He is absolutely delighted and he hopes that his father will survive long enough to see his 80th birthday on Saturday.
"Mr Ronald Biggs has been informed today of my decision regarding his application for compassionate release on medical grounds," Straw said in a statement.
What do you think? Do you think Jack Straw should have acted sooner?
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