After nearly five years in custody, Lian Bin "Robert" Xie will walk free following the bail decision handed down on Tuesday afternoon by Justice Elizabeth Fullerton.
But Justice Fullerton told the court she would impose strict conditions such that Xie would be "effectively under house arrest", and that he would be subject to an electronic monitoring device.
Xie remained impassive in the dock as Justice Fullerton announced her decision.
The Crown alleges Xie murdered Min "Norman" Lin, 45, Mr Lin's wife, Yun "Lily" Li Lin, 44, and their sons Henry, 12, and Terry, nine, with a hammer-like weapon in 2009.
He is also alleged to have killed Lily's sister, Yun Bin "Irene" Lin, 39. Xie has maintained his innocence and is expected to face a fourth trial next year.
The jury in Xie's long-running third trial last week resulted in a hung jury, and two previous trials were cut short.
Senior Crown Prosecutor Mark Tedeschi QC had argued there was a real risk that Xie would be able to draw on family connections in his native China to flee the jurisdiction if he was released on bail.
But on Tuesday Justice Fullerton said she was satisfied that this possibility, "whilst neither fanciful nor remote", could be mitigated against.
She heard submissions from Xie's legal team that he had been living in near isolation behind bars and that his mental and physical health had deteriorated in recent months, with one psychiatrist noting his "extremely severe" symptoms of depression, anxiety and stress.
The 51-year-old was unable to exercise alongside other inmates, visit the library, or even use a foreign-language dictionary because he was not allowed access to hard-cover books, the court heard.
In addition, a combination of insomnia and early wake-ups allowed Xie only three hours of sleep a night whilst in jail.
Xie's wife Kathy, who has supported him throughout the trial, spoke to the media outside court.
"Thank you to my legal team and thank you everyone believing my husband's innocence," she told reporters. "Thank you very much."
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