Last year Johal was acquitted in a case where he was accused of financially supporting the KLF terror group.
He remained in prison because he faces federal charges in eight other cases, for which he potentially faces the death penalty.
However, his legal team argues that these cases are almost identical and that the other charges should be dismissed.
There have been hundreds of hearings over the past nine years and the bail order concludes that the trial is “certainly not likely to conclude anytime soon”.
His brother Gurpreet Singh Johal – who has lobbied successive governments calling for his release – said the decision to grant bail had been a “really important milestone”.
“It is just a first step, but it is a step in the right direction,” he said.
The move was also welcomed by politicians and the legal charities Redress and Reprieve, who represent Johal in the UK.
Reprieve’s deputy executive director Dan Dolan said the release was “a really important moment” – but that Johal still faced the death penalty on “trumped up charges”.
“It is really important that we recognise he’s not out of the woods yet,” he said.
“We now really need to push to get him home.”
Redress said Johal’s release from prison could not undo “the intolerable suffering caused by nine years of arbitrary detention”.