Map of Ellingham Hall, where Wikileaks founder Julian Assange will reside based on the terms of his bail after being arrested for alleged sex crimes. With details of bail conditions. [Photo/Agencies]

Assange was granted conditional bail Tuesday, but prosecutors appealed, arguing that he might abscond. High Court Justice Duncan Ouseley rejected the appeal Thursday, saying Assange "would diminish himself in the eyes of many of his supporters" if he fled.

"I don't accept that Mr. Assange has an incentive not to attend (court)," Ouseley said. "He clearly does have some desire to clear his name."

WikiLeaks spokesman Kristinn Hrafnsson had said Assange might have to spend one more night behind bars anyway, because of difficulties producing the 200,000 pounds ($316,000) bail pledged by several wealthy supporters, including filmmaker Michael Moore. But lawyers managed to collect the money quickly.

The restrictions Ouseley imposed on Assange amount to "virtual house arrest," Hrafnsson said. But he added that Assange can still use Smith's estate as a base for coordinating the publication of the leaked cables.

"There is a good Internet connection there," he noted.

The subject of whether Assange should have Internet access was never raised in court. WikiLeaks continued publishing documents even while Assange was in prison- including a new batch that hit the Web two hours ahead of his release.

"We have seen in the week I have been away that my team is robust," Assange told the BBC outside the Frontline Club. "It does show the resilience of the organization, that it can withstand decapitation attacks."

The publication of the cables has angered US government officials, embarrassed allies and nettled rivals. The US State Department says that international partners have curtailed their dealings with Washington as a result of the cable leaks, and have gone on the offense in a bid to limit the diplomatic fallout.

Assange insists that publishing the documents was essential to expose government wrongdoing. In particular, he has referred repeatedly to one cable that asked diplomats to gather information on United Nations staff such as their passwords, frequent flier numbers and even biometric information.

State Department officials say the cable originated from the US intelligence community and deny Assange's contention that it ordered diplomats to spy. On Thursday, the US ambassador to the United Nations in Geneva continued America's damage-control efforts over the document.

"I just want to assure everybody we're not collecting data on U.N. officials," Betty E. King told reporters in Geneva.

US officials are investigating WikiLeaks and considering charges against Assange, a case that if pursued could end up pitting the government's efforts to protect sensitive information against press and speech freedoms guaranteed by the First Amendment. The government suspects WikiLeaks received the documents from an Army private, Bradley Manning, who is in the brig on charges of leaking other classified documents to the organization.

Assange was arrested not because of WikiLeaks, but because Swedish officials are seeking him for questioning on allegations stemming from separate encounters with a pair of women in Sweden over the summer. The women have accused Assange of rape, molestation and unlawful coercion. Assange denies the allegations, which his lawyers say stem from a dispute over "consensual but unprotected sex."

After his release, Assange said he will "continue to protest my innocence in this matter and to reveal, as we get it, which we have not yet, the evidence from these allegations."

Although Swedish officials insist the extradition effort has nothing to do with the WikiLeaks controversy, Assange's supporters say the timing of the allegations suggest that the case has been tainted by politics.

In Washington, State Department spokesman P.J. Crowley stressed that the US has no involvement in Sweden's case. He said of Assange's release, "Perhaps that will put the conspiracy theories to bed once and for all."

The Swedish moves could complicate any potential US effort to bring Assange to trial for revealing classified information. A US extradition request would have to compete with the Swedish one, and the legal wrangling could drag on for months or years.

Swedish prosecutor Marianne Ny said the bail decision would not change the ongoing investigation in Sweden, and the extradition case would be handled by British authorities. Assange's next hearing is set for Jan 11.