By Nailia Bagirova and Margarita Antidze
BAKU (Reuters) - Azerbaijan on Wednesday released investigative journalist Khadija Ismayilova from jail, where she was serving a seven-and-a-half year sentence, in an apparent move to deflect Western criticism of the ex-Soviet republic's human rights record.
Ismayilova, who worked for U.S.-funded Radio Free Europe and was known for exposing corruption among Azerbaijan's ruling elite, was sentenced last September on charges which included embezzlement, illegal business activities and tax evasion.
The Supreme Court on Wednesday amended her imprisonment to 3 1/2 years of suspended sentence and released her from prison.
She vowed to continue to fight to clear her name. "I will continue to fight until complete acquittal," Ismayilova told reporters after her release. "I will also continue to work as a journalist."
Ismayilova's investigative journalism had probed the business dealings of President Ilham Aliyev and his family as well as human rights abuses.
European bodies and rights activists welcomed her release.
"Today's decision, which follows the recent release of many prominent journalists and human rights defenders, confirms my belief that Azerbaijan is at a turning point and I encourage the country to continue on this positive path," Pedro Agramunt, the Council of Europe's parliamentary assembly president, said in a statement.
The Organisation for Security and Cooperation in Europe called on the Azeri authorities to drop all charges against Ismayilova and release the remaining imprisoned journalists.
The U.S. government also hailed Ismayilova's release.
"We view this as a positive step, and we encourage the Azerbaijani government to drop the remaining charges against her," the State Department said in a statement.
Azerbaijan pardoned 148 prisoners including journalists, rights activists and political opponents in March, although several other remain behind bars.
Analysts say Aliyev has included some political prisoners in amnesties in recent years to deflect complaints over crackdowns on free speech in Azerbaijan, a major oil and natural gas exporter.
The government dismisses Western charges, saying the country, a Caspian Sea republic of about 9 million people lying between Russia, Iran and Turkey, enjoys full freedom of speech and a free press.
(Additional reporting by Eric Walsh in Washington; Editing by Richard Balmforth and Andrew Hay)