Julian Assange walked out of custody on Thursday night after winning an appeal against being held in detention pending a hearing on allegations of sexual offences in Sweden.

To the sound of the shouts of supporters on the steps of the court, Mr Assange said he hoped to "continue my work and continue to protesr my innocence in this matter."

He will spend Christmas in a country mansion instead of a London prison cell, after the UK's High Court ruled in favour of the WikiLeaks founder.

A judge heard an appeal against bail from UK prosecutors on Thursday, who argued that Mr Assange was a flight risk before an extradition hearing next year. The 39-year-old Australian is wanted for questioning in Sweden over claims of rape and sexualassault against two women. Swedish prosecutors issued a warrant for his arrest last week.

"There are so many twists and turns in this particular case that it's impossible to say that this is the end of the line," said Mark Stephens, Mr Assange's lawyer. Mr Stephens accused the Swedish prosecutors of having a "continuing vendetta" against Mr Assange, although he said it was "opaque" as to who had initiated the appeal against his client's bail.

Mr Assange had been held in prison in south London since being denied bail last week.

Mr Justice Ouseley on Thursday tightened up bail conditions that had been set by a London magistrate this week, increasing the number of people standing surety for Mr Assange.

The judge added a further seven people to stand as surety against Mr Assange absconding and raised bail from £240,000 to £275,000. Mr Assange must also wear an electronic tag, surrender his passport, stay at Ellingham Hall, a stately home in Suffolk, and report to a police station daily.

A WikiLeaks spokesman said Mr Assange could continue to help run the site from Suffolk. Release of US diplomatic cables, which has angered Washington, is expected to continue into the new year.

US authorities, keen to make an example of Mr Assange to dissuade further leaks, are exploring ways to prosecute him.

Mr Stephens said in a television interview at the weekend that he had been told of a "secretly empanelled grand jury" in Virginia, and said the sex allegations were "nothing more than a holding charge".