Mr Osborne, 47, who worked for Hart DC and featured in the Guinness Book of Records as the leading authority on such labels, was jailed on August 30 at Kingston crown court after being convicted of nine thefts for which he received concurrent 18-month terms.
He was also ordered to pay £2,292 costs within 12 months.
Mr Justice Ognall announced in the appeal court: 'We substitute concurrent sentences of six months. Weighing the offences against compassionate circumstances and his positive good character 18 months was manifestly excessive.
'It is submitted with justification that the chronicle of depredations coincided almost precisely with a particularly florid period in a chronic depressive illness he had suffered for some considerable time'.
He said the court agreed with the sentencing judge that factors responsible for Osborne's conduct were that he had become obsessed with his hobby of collecting beer bottle labels, had been under pressure at work and very depressed.
Osborne's counsel, Peter Testar, had said he had been showered with testimonials demonstrating the esteem in which Osborne had been and still was held by colleagues and others.
He had also submitted that Osborne's young son was bereft of the comfort of his father, and Osborne's wife had suffered serious illness and her mother had died.
Mr Justice Ognall commented: 'However esoteric the character of his hobby, he was violating and damaging if not destroying part of this country's national heritage.
'The fact a person of his character decided on this criminal conduct makes it all the more reprehensible.
'His position in local government carried with it a particularly heavy responsibility not to dishonour the esteem in which he was held'.
The judge said that Osborne, who had a collection of several thousand labels said to be worth about £50,000 and was president of a label collectors' society, had used the facilities at the Public Records Office at Kew since the early-1980s.
In August 1993 pages of whole and part beer bottle labels cut from documents issued to him the previous month were found in the office's toilet system.
A check found 12 documents viewed by him and including unique, original and priceless beer bottle labels were damaged.
Three days later he was seen on a video in the reading room to be making cutting movements over documents later found damaged and with papers missing, and he was arrested.
Mr Testar told the appeal court that local newspaper publicity had been particularly wounding for the family, and Osborne had been dismissed between conviction and sentence.
He said after the hearing that Osborne should be released on November 30.