A New York judge granted bail for US$1 million for International Monetary Fund leader Dominique Strauss-Kahn from a New York City jail on Thursday.

New York State Supreme Court Judge Micheal Obus said that the former IMF chief can be released on the bail but remains under house arrest, under the watch of armed guards, at a private apartment in Manhattan.

The 62-year-old banker and diplomat wore an expression of relief after Obus announced his decision. Later, he blew a kiss toward his wife, China Daily reported.

Prosecutors said Strauss-Kahn's wealth and international connections would make it easy for him to flee and opposed his release at his first bail hearing on Monday.

One of Strauss-Kahn's defense lawyers, William Taylor, told the judge that "he is an honorable man. He will appear in court.

China Daily reported that a French Socialist lawmaker and longtime ally, Francois Pupponi, expressed relief at the decision to allow Strauss-Kahn to leave jail.

He said "there's finally a bit of good news in a terrible week … we were no longer expecting good news."

Strauss-Kahn resigned as managing director of the International Monetary Fund late Wednesday, saying he needed to focus on clearing his name.

The political wrangling over who will succeed Strauss-Kahn at the IMF already has begun. European officials, including Germany's chancellor, the European Commission and France's finance minister, have been arguing that his replacement should be European.

Strauss-Kahn was arrested in New York on May 14 accused of a sex attack on a hotel maid. Supporters of Strauss-Kahn, who had been a likely candidate in France's 2012 presidential election, said they suspected he was the victim of a smear campaign.