Former IMF chief Dominique Strauss-Kahn has been released from house arrest and had his $6m (£3.7m) cash bail and bond returned, reports say.
Prosecutors are said to have agreed that Mr Strauss-Kahn should be freed "on his own recognisance," meaning he must simply promise to appear in court.
He is accused of sexually assaulting a maid in a New York hotel on 14 May.
But the case is reported to be close to collapse after serious doubts arose about the credibility of his accuser.
The 62-year-old French politician - who had been seen as a leading candidate for the French presidency - appeared in court in New York on Friday over the sexual assault case.
After assessing disclosures by prosecutors from the office of the Manhattan district attorney, a judge rescinded the strict bail terms imposed on Mr Strauss-Kahn, but did order that his passport be retained so he could not travel outside the US.
Among the submissions was information that the maid gave false testimony to a grand jury, omitting the fact that she cleaned another room before alerting a supervisor of her claims of sexual assault.
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The only defence Dominique Strauss-Kahn has is that this sexual encounter was consensual. That it a lie”
"I understand that the circumstances of this case have changed substantially and I agree the risk that he would not be here has receded quite a bit. I release Mr Strauss-Kahn at his own recognisance," Justice Michael Obus told the court on Friday.
"In the meantime there will be no rush to judgment on this case," Mr Obus said.
On the court steps, opposing lawyers each maintained their case.
"I want to remind all of you that at each appearance in the last six weeks, we asked you and asked the world not to rush to judgement - now i think you can understand why," said Mr Strauss-Kahn's lawyer, William Taylor.
"We believe the next step will lead to the complete dismissal of the charges," he added.
After Friday's hearing, Mr Strauss-Kahn strode out of court with a smile and his wife on his arm.
In earlier court hearings, prosecutors had spoken of the strength of their case. One attorney said the proof against him was "substantial".
The alleged victim's lawyer, Kenneth P Thompson, maintained on Friday that his client's story was genuine and that Mr Strauss-Kahn was guilty of sexual assault charges.
"The only defence Dominique Strauss-Kahn has is that this sexual encounter was consensual. That is a lie," he said.
He continued at length, giving a detailed and graphic account of the maid's alleged encounter with Mr Strauss-Kahn and criticising District Attorney Cyrus Vance Jr.
Mr Strauss-Kahn is to appear back in court on 18 July-bbc
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