The reform was one of a series of measures outlined on Wednesday in two new decrees under a state of emergency declared after the July 15 failed putsch during which 240 people, mostly civilians, were killed. The government gave no reason for the reform.

Western allies worry President Tayyip Erdogan, accused by opponents of creeping authoritarianism, is using the crackdown to target dissent, testing relations with a key NATO partner in the war on Islamic State.

Angrily dismissing the West`s concerns, Turkish officials say they are rooting out a serious internal threat from followers of a U.S.-based cleric Ankara blames for orchestrating a coup bid.

Wednesday`s decrees, published in the Official Gazette, also ordered the dismissal of 2,360 more police officers, more than 100 military personnel and 196 staff at Turkey`s information and communication technology authority, BTK.

Those dismissed were described as having links to cleric Fethullah Gulen, a former ally turned enemy whom Erdogan says is behind the attempt by rogue troops using tanks and jets to overthrow the government. Gulen denies involvement in the coup.

Under the penal reform, convicts with up to two years left in sentences are eligible for release on probation, extending the period from one year. The "supervised release" excludes those convicted of terrorism, murder, violent or sexual crimes.

To be eligible for the scheme, prisoners must have served half of their sentences. Previously they were required to have already served two thirds of their sentence.

"This measure is not an amnesty," Justice Minister Bekir Bozdag wrote on Twitter of the penal reform. "Around 38,000 people will be released from... jail in the first stage as a result of this measure."

He did not say why the reform was needed but Turkey`s prison population has trebled over the last 15 years. There were 188,000 prisoners in Turkey as of March, some 8,000 more than the existing capacity.

Another measure gave the president more choice in appointing the head of the armed forces. He can now select any general as military chief, one decree said. Previously only the heads of the army, navy or air force could be promoted to the post.

A telecoms authority will also be closed under the moves.

Erdogan, already accused by critics of creeping authoritarianism before the coup bid, says Gulen and his followers infiltrated government institutions to create a `parallel state` in an attempt to take over the country.

Alongside tens of thousands of civil servants suspended or dismissed, more than 35,000 people have been detained in the purge. Judges, journalists, police, and teachers are among those targeted for suspected links to Gulen`s movement.

Turkish police on Tuesday searched the offices of a nationwide retail chain and a healthcare and technology company, detaining executives who authorities accuse of helping finance Gulen`s network.

FIRST `COUP` INDICTMENT

A prosecutor in the western province of Usak has submitted the first indictment formally accusing Gulen of masterminding the coup plot, the state-run Anadolu Agency said.

The 11-month investigation focused on alleged wrongdoing by the Gulen movement from 2013, but includes charges Gulen organized an armed "terrorist" group to topple the government, scrap the constitution and murder Erdogan on July 15.

The 2,257-page indictment seeks two life sentences and an additional 1,900 years in jail for Gulen, plus tens of millions of lira in fines, Anadolu said. It names a total 111 defendants, including 13 people who are already in custody.

U.S. officials have been cautious on the extradition of Gulen, saying they need clear evidence. He has lived in self-imposed exile in Pennsylvania since 1999, but it is not clear Ankara has yet made a formal request.

Western criticism of the purge and Ankara`s demands U.S. officials send Gulen home have already frayed ties with Washington and the European Union, increasing tensions over an EU deal with Turkey to stem the flow of migrants.

In another tense exchange, Turkey lashed out at Germany on Wednesday, saying allegations in a media report that Turkey had become a hub for Islamist groups reflected a "twisted mentality" that tried to target Erdogan.

Incensed over a perceived lack of Western sympathy over the coup attempt, Erdogan has revived relations with Russia, a detente Western officials worry may be used by both leaders to pressure the European Union and NATO.

Measures in Wednesday`s decrees will also enable former air force pilots to return to duty, making up for a deficit after the dismissal of military pilots in the purge.

Turkey declared a three-month state of emergency on July 21.

Under previous emergency rule decrees, Turkey had already dismissed thousands of security force members as well as ordering the closure of thousands of private schools, charities and other institutions suspected of links to Gulen.

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