Suu Kyi, 80, has been detained by the junta since and her whereabouts have been unclear amid a deadly civil war that was triggered by the February 2021 coup that has engulfed much of the impoverished country.
"The remaining portion of Daw Aung San Suu Kyi's sentence has been commuted to be served at a designated residence," state-run MRTV reported, using an honorific for the veteran politician.
State media also broadcast a photograph of Suu Kyi, seated on a wooden bench and flanked by two uniformed personnel - the first public image of her in years.
Suu Kyi has not been seen publicly since February 1, 2021 and the last official photo showing her was released on May 24, 2021, showing her in court.
At the United Nations in New York, UN spokesman Stephane Dujarric welcomed the news.
"We've just seen the reports," he said.
"I can tell you that we appreciate the commutation of Aung San Suu Kyi to a so-called house arrest in a designated residence. It is a meaningful step towards conditions conducive to credible political process."
Dujarric added that the only viable political solution in Myanmar "must be based on immediate cessation of violence and a genuine commitment to inclusive dialogue".
However, in a statement, her son Kim Aris said Thursday's announcement by Myanmar authorities did little to dispel fears about her condition or even confirm that she was still alive.
"I still do not know where my mother is. I do not know how she is. I remain deeply concerned about whether she is still alive," he said.
"If she is alive, I ask for proof of life."
In December, Aris told Reuters he has not heard from his mother in years, only receiving sporadic second-hand details about her heart, bone and gum problems since her detention.
"It is good to hear that the house arrest has been confirmed but we haven't received any direct notification," a member of her legal team told Reuters.
"We only found out about it from the news announcement."
After a marathon run of trials, Suu Kyi was sentenced to 33 years after convictions on charges ranging from corruption and inciting election fraud to violating state secrecy rules, which her allies maintain were politically motivated and aimed at sidelining her.
That sentence was later commuted to 27 years, and then by a sixth in a Myanmar New Year amnesty on April 17 that freed her ally and co-defendant Win Myint, the former president.
Earlier on Thursday, her sentence was reduced by a further one-sixth as part of a wider amnesty of all prisoners in Myanmar's jails.
Suu Kyi, the daughter of the former Burma's independence hero General Aung San, was held under house arrest for a total of 15 years under a previous junta at her family residence on Yangon's Inya Lake, where she famously gave impassioned speeches to crowds of supporters over the metal gates of the property.
Myanmar's junta chief-turned-president Min Aung Hlaing, who overthrew Suu Kyi in the coup, has faced persistent international pressure to release political detainees since a recent election, including from the Southeast Asian bloc ASEAN, which he is seeking to re-engage with after being barred from its summits.
Min Aung Hlaing last week told Thailand's foreign minister she was being "well looked after" and his government was considering unspecified "good things".
with AP
