Former Attorney General John Mitchell will be released from federal prison next week because of his arthritic hip, the Justice Department announced yesterday.

Mitchell, 64, has been confined in the minimum security prison at Maxwell Air Force Base near Montgomery, Ala., since last June 22. He is serving a one-to-four year term for conspiring to cover up White House involvement in the Watergate affair.

Asked whether Mitchell will have to serve the rest of his sentence when he recovers, his lawyer, William D. Hundley, said "nobody has said anything different to me."

Norman A. Carlson, head of the federal prison system, recommended Mitchell be furioughed for treatment of his degenerative hip ailment, the Justice Department said.

Carlson recommended the furiough rather than having Mitchell treated at the federal prison hospital in Springfield, Mo., because of the security risk involved, the department said. The Springfield hospital has 1,050 inmates, including psychiatric patients.

"It's a type of degenerative arthritic condition, a rare form of arthritis that eats away the hip bone," said Hundley. "They take out what's left and put in an artificial hip bone."

The lawyer said he talked with Mitchell and "he's naturally glad that the Bureau of Prisons took the position that they are not equipped to do the operation!"

Hundley said the pre-operative tests and the operation probably will be performed at a hospital in the Washington area.

Mitchell's release will leave only two other Watergate figures in prison. John D. Ehrlichman, former Nixon domestic counselor, is scheduled for parole next April 27.

Former White House Chief of Staff H. R. Haldeman is eligible for parole next AJune, the same time originally set for Mitchell. Haldeman and Ehrlichman both are being allowed to spend the Christmas holidays outside their prisons.

In a September petition asking that Mitchell's sentence be reduced, his lawyer said the former Attorney General needs an artificial right hip.

"This condition has become extremely painful to defendant and his mobility has become severely impaired," Hundley said in the petition.

Hundley said Mitchell also suffers from an enlarged heart, "apparently the result of hypertension."