(Adds CPS, British PM comments, background)
MADRID, Sept 2 (Reuters) - Two British parents detained in Madrid for taking their seriously ill child out of hospital could be reunited with him as soon as Wednesday, as legal authorities in both Spain and Britain prepared to allow their release from custody.
The high-profile case of the parents' arrest and separation from their five-year old son prompted British Prime Minister, David Cameron, to call for "an outbreak of common sense" amid widespread condemnation in the country's media of the British police's pursuit of the couple.
The parents of Ashya King, who has a brain tumour, were separated from their son on Saturday, following a two-day cross-border manhunt initiated after they ignored medical advice and removed him from a hospital in Southampton, southern England, and took him to Spain.
A Spanish court source told Reuters on Tuesday that Spain's state prosecutor was due to request that Naghemeh and Brett King be released on bail, while Britain's Crown Prosecution Service (CPS) said later in the day that it was taking steps to withdraw the European arrest warrant for the couple.
"No further action will be taken against Mr and Mrs King and we are now in the process of communicating this decision to the Spanish Authorities so that they can be reunited with their son as soon as possible," the CPS said on Tuesday.
Cameron had earlier expressed sympathy for the couple's plight but said the government could not tell the police either in Britain or Spain what to do.
"I just hope there will be a rapid outbreak of common sense so that the family can be reunited with this young boy and the best treatment can be given him either in the United Kingdom or elsewhere," he told a British radio station.
The boy's parents have said they took him out of hospital because they wanted him to receive a different type of treatment, prompting questions about whether the British police overreacted in launching a Europe-wide manhunt.
Under the Spanish judicial system, the state prosecutor's request for bail needs approval from a judge, although usually the prosecutor's request is upheld in such cases. The judge was due to make a decision on whether to release the parents on Wednesday.
The source said that after receiving medical reports from hospitals in both countries, the state prosecutor did not believe there was a reason for the parents to continue to be held in custody given that they had not acted negligently.
Ashya's brother Danny, who was allowed to visit him in hospital in Spain, told ITV News the boy was "fine" and that his condition had not changed since he entered hospital in Malaga where he is being treated.
The chief constable of Hampshire police, which sought the parents' arrest, defended that decision in a letter published on Tuesday, citing the medical evidence and the level of concern for the child's safety, but also called for the parents to be allowed to spend time with their son.
"Our intent was to secure his safety not to deny him family support at this particularly challenging time in his life," chief constable Andy Marsh said in the letter. (Reporting By Inmaculada Sanz, additional reporting by Sarah Young,; writing by Sonya Dowsett; Editing by Sarah White and Susan Fenton)