Assange has been held in a London prison since surrendering to police a week ago due to an arrest warrant in Sweden, where he faces charges including rape and molestation after two separate women said he had sex with them without their consent.
The judge said that Assange must abide by strict bail conditions as he fights extradition to Sweden. Assange must surrender his passport, reside at a friend's address in the UK, report to police on a daily basis and observe two four-hour curfews each day.
One of Assange's lawyers, Mark Stephens, said the court was demanding 200,000 pounds ($316,000) in bail up front before Assange could be freed.
A total of 240,000 pounds ($380,000) has been promised as a guarantee by several supporters, including filmmaker Michael Moore, but Stephens said it was taking time to get the money in cash.
A lawyer acting on behalf of Swedish authorities, had asked the court to deny Assange bail because the allegations in Sweden were serious, Assange had only weak ties to Britain and he had enough money "to abscond."
Some Assange supporters suspect the extradition request has been motivated by WikiLeaks' decision last month to begin publishing a trove of 250,000 secret U.S. diplomatic cables, something Swedish officials have denied.
Assange's next court appearance was set for Jan. 11, ahead of a full hearing on Feb. 7 and 8.
His lawyer Mark Stephens said that Assange is "very pleased" with the bail decision but that it will take "an inordinately long period of time" to raise and deliver 200,000 pounds in cash to the court. Stephens said the court often allows prisoners to walk on the promise to pay bail, rather than actually bringing in the money.
"Meanwhile, an innocent man remains in jail ... in Dickensian conditions," Stephens added.
The Associated Press contributed to this report.