A leader of Nigeria's oil militants has been released on bail on health grounds after being held on treason charges for almost two years.
Mujahid Dokubo-Asari says locals should benefit from the oil
The BBC's Alex Last in Lagos says Mujahid Dokubo-Asari is the best known of the militant leaders.
His release has been a key demand of armed groups who have staged numerous attacks on oil installations.
The move is seen as part of the new government's pledge to bring peace to the troubled Niger Delta region.
Last week, three state governors from the Niger Delta appealed to new President Umaru Yar'Adua to free Mr Dokubo-Asari because of his ill health, while the Supreme Court refused a request to free him, citing national security fears.
"I'm convinced the accused is not playing to the gallery. The accused is ordered to be released on health grounds," said Justice Peter Olayiwola.
He ordered Mr Dokubo-Asari not to engage in any political activity and for his movements to be monitored.
Leaders from Mr Dokubo-Asari's Ijaw community have welcomed his release.
"This is good news for anyone with a business in the Niger Delta. It will pour cold water on the situation. Asari is key to bringing peace to the delta," said Emmanuel Diffa, an Ijaw elder who has been campaigning for his release.
In his inauguration speech last month, President Yar'Adua said that bringing peace to the region was one of his main priorities.
He has already made preliminary contacts with the militants, who have declared a one-month truce and freed a large number of the foreign oil workers they had seized.
But on Wednesday, at least eight militants were killed by the army, local sources have told the BBC.
This had raised fears of a resumption of hostilities.
Mr Dokubo-Asari was arrested in 2005 after saying in a newspaper interview that the Niger Delta, where most of Nigeria's oil is found, should secede.
The militants argue that local people should benefit from more of Nigeria's oil.
The attacks on hostage-taking in the Niger Delta have led to a 25% cut in Nigeria's oil production.