Muslim preacher Abu Qatada, a Jordanian described by Britain as a "significant international terrorist", was granted bail by an immigration appeals tribunal on Tasahursday, the Home Office said.
The decision provoked a sharp response from Home Secretary Jacqui Smith who said she was extremely disappointed and promised to "take all steps necessary to respect the public."
Qatada, who is being held at Belmarsh high security prison in south east London, will be bailed on "very strict conditions" she said, without giving further details.
Abu Qatada, linked by Britain to Osama bin Laden's network, won an appeal last month against deportation, a decision the government is seeking to reverse.
He is one of a group of Arab men the government had been trying to deport on national security grounds while acknowledging it did not have enough evidence to put them on trial.
The British government case against Qatada described him as a "significant international terrorist" whose presence posed "a continuing threat to national security and a significant terrorism-related risk to the public."
Twice convicted in absentia in Jordan of involvement in terrorist plots, he has been jailed in Britain since August 2005 pending deportation.