Nicaraguan Catholic Bishop Rolando Alvarez was released from prison late on Monday, a diplomatic source said, marking a possible turning point in the government's prolonged crackdown on the Catholic Church.

The diplomatic source said on Tuesday that negotiations between the government and the country's Catholic bishops were going on over Alvarez's future, and the prelate was at the Catholic episcopal compound in the capital.

The source, who declined to be identified, added that talks included the possibility that the bishop might be expelled from the Central American country or otherwise sent into exile.

The government did not immediately respond to a request for comment on the release of Alvarez after normal business hours on Tuesday.

If the bishop refused to leave the country, he could be returned to prison, the source said.

Earlier in the day, the news outlet Confidencial reported that Alvarez had been released on Monday night, citing church and diplomatic sources.

Alvarez, the bishop of rural Matagalpa and a prominent critic of President Daniel Ortega, was jailed last year and was this year sentenced to 26 years in prison on treason charges after he refused to be expelled to the United States.

Formal ties between Nicaragua's government and the Vatican were severed this year after Pope Francis derided Ortega's government as a dictatorship.

The root of the conflict date back five years, when church leaders were called in by the government to mediate anti-government protests that turned violent with the death of more than 300 people.