Bilal Khazal was found guilty in September 2008, but the conviction was quashed last month on the grounds that the judge failed to give proper directions to the jury.

Mr Khazal faces a range of very stringent bail conditions, including giving police his telephone and internet details, not leaving Sydney and not accessing websites that promote violence or jihad, and not using public phones.

Justice Michael Adams said Mr Khazal was to be released into the care of his brother-in-law. The brother-in-law and other members of his family must provide sureties in excess of $400,000, which must be paid if he absconds.

Justice Adams found that Mr Khazal was not a danger to the community nor was likely to abscond.

Mr Khazal, a former airport baggage handler, is accused of producing a 110-page handbook in 2003 that allegedly has instructions on assassination - including making letter-box bombs and booby-trapping cars - kidnapping and shooting down aircraft.

He has been in Goulburn's notorious Super Max prison with the likes of serial killer Ivan Milat.

Mr Khazal's barrister Charles Waterstreet said today that his jail conditions had been "just one step down from Guantanamo Bay".