Butler, 24, joined the Iron for an undisclosed fee from National League South side Hemel Hempstead in June.
He kept two clean sheets in six appearances for the club, but was sent off in their defeat by Macclesfield.
Fellow keeper Sam Beasant joined the club last week after his release by Cambridge United and made his debut against Guiseley last Saturday.
Braintree Town have agreed to release goalkeeper Jamie Butler just 72 days after he signed for the club.