Ex-IMF chief Dominique Strauss-Kahn was indicted Thursday on sexual assault charges but ordered released on bail by a New York judge after agreeing to house arrest and to post $1 million in cash.
He also had to put up a $5 million bond, surrender all travel documents and pay to have an armed guard with him at all times.
Judge Michael Obus agreed to free the former head of the International Monetary Fund on bail shortly after he was formally indicted. An arraignment hearing in which the exact charges will be revealed was set for June 6.
"An indictment has been voted and filed against the defendant," prosecutor John McConnell told a packed New York court.
As Strauss-Kahn arrived, looking shaven and wearing a jacket and shirt, the former IMF chief smiled at his American-born wife, French television journalist Anne Sinclair, who looked red-eyed but calm, while his daughter Camille openly sobbed.
The hearing came just hours after Strauss-Kahn, 62, resigned from the IMF vowing to clear his name after being charged in the alleged attack on a 32-year-old chambermaid in a luxury New York hotel suite on Saturday.
Defense lawyer William Taylor had urged Obus to grant Strauss-Kahn bail, assuring the court that the veteran French politician was an "honorable man" who would not try to flee.
The prosecution contends that Strauss-Kahn, was seen rushing from his hotel room on Saturday fleeing the scene after sexually assaulting and attempting to rape the woman, an immigrant from West Africa.
His flight was "unusually hasty," McConnell said. "His exit from that crime scene certainly suggests that something had gone on."
"The proof against him is substantial. It continues to grow every day," he added, referring to the man once seen as a strong contender to be the next French president.
But the defense argues that Strauss-Kahn is innocent of all charges, as they offered strict conditions for his bail.
Strauss-Kahn will live in 24-hour confinement in an apartment owned by his wife in New York in which his daughter has been staying, with video cameras and a security guard posted with him.
"I deny with the greatest possible firmness all of the allegations that have been made against me," Strauss-Kahn said in his letter of resignation from the IMF early Thursday.
He added: "I want to devote all my strength, all my time, and all my energy to proving my innocence."
Strauss-Kahn was refused bail in his first court hearing Monday, after a different judge deemed him a flight risk, and he has now spent three nights in the notorious Rikers Island jail in isolation and on suicide watch.
The New York jail is a chaotic maze of holding cells filled with thousands of defendants who either can't afford bail or who are deemed a flight risk.
But the lawyer for Strauss-Kahn's accuser, Jeff Shapiro, said his client, who has so far not been identified, was "alarmed" at the prospect of her alleged attacker leaving jail.
"The idea that this man would somehow or another be on the streets and free, I'm sure it would cause her a great deal of concern," he told CNN Wednesday. "She's very concerned about her security."
She alleges that Strauss-Kahn groped and mauled her in his room in the posh Sofitel hotel in Times Square and forcibly tried to have oral sex with her.
Police have taken away a section of a rug from the luxury suite which reportedly contains evidence of bodily fluids hoping to gain DNA evidence from the scene.
But Strauss-Kahn's lawyer Benjamin Brafman has said the evidence "will not be consistent with a forcible encounter," and New York media reports quoted a source close to the defense as saying "there may well have been consent."
Strauss-Kahn's resignation paves the way for the IMF to elect a new managing director as it steers delicate negotiations on the eurozone debt crisis.
Acting IMF chief John Lipsky said the Fund's executive board would meet later Thursday to launch the search for Strauss-Kahn's successor, with French Finance Minister Christine Lagarde a front-runner to succeed him.