Tracey Connelly, the mother of Baby P, is understood to have been released from prison on Tuesday - the same day as it was revealed that former child protection boss Sharon Shoesmith will receive a payout of up to £600,000 over her unfair dismissal.
Sharon Shoesmith was fired from her £133,000-a-year job by Haringey Council without compensation in December 2008, after a damning report by Ofsted into the handling of the Baby P case.
However, Ms Shoesmith won a ruling that she was unfairly sacked and a Haringey Council spokeswoman confirmed on Tuesday that a settlement had been reached with Ms Shoesmith, with reports suggesting it was a six-figure sum.
Ed Balls has defended his role in the removal of Sharon Shoesmith after the death of Peter Connolly, insisting he would "do the same thing again".
Mr Balls, who was Children's Secretary at the time, removed Ms Shoesmith from her role after a damning report on the death of Peter Connelly.
Balls, who is now the shadow chancellor, said: "I made the decision to remove the person who had failed, I did so in the best interests of children across the country. Faced with the same situation I would do the same thing again."
Eric Pickles said Haringey Council is "bankrolling a state-sponsored cover-up" in its payout to Sharon Shoesmith.
The Communities and Local Government Secretary said there should be no rewards for failure in the public or the private sector.
We've been very clear that legal devices like non-disclosure or compromise agreements should not be used to gag staff or brush under the carpet golden goodbyes to senior staff.
I fail to see how Haringey Council's secretive actions are in the public interest, given the astonishing sum of taxpayers' money involved and the immense public concern and upset at the Baby P scandal.
Bankrolling a state-sponsored cover-up is a massive error of judgment by Haringey Council, and compounds their mishandling of the whole affair.
– Communities and Local Government Secretary Eric Pickles
The payout to Sharon Shoesmith over her unfair dismissal following the Baby P tragedy "leaves a bad taste in the mouth", former children's secretary Ed Balls told BBC Radio 5 Live .
An independent report said there were disastrous failings in Haringey children's services.
They said the management was at fault. Sharon Shoesmith was the director of children's services and so of course it leaves a bad taste in the mouth that the person who was leading that department and responsible ends up walking away with, it seems, a large amount of money.