Prime Minister John Howard has said Australians would be "distressed" by Indonesia's release of a Muslim cleric convicted over the 2002 Bali bombings.
The cleric's voice was drowned out by supporters' cheers
Abu Bakar Ba'asyir, found guilty in March 2005 of conspiracy over the bomb plot, was released in Jakarta after serving 26 months in prison.
Security experts say the cleric is a founding member of regional Islamic militant group Jemaah Islamiah.
Families of people killed in the Bali blast also criticised the release.
Mr Howard told parliament he had a message for Indonesian politicians.
"I want them to understand from me on behalf of the government how extremely disappointed, even distressed, millions of Australians will be at the release of Abu Bakar Ba'asyir," he said.
Eighty-eight of the 202 victims of the 2002 Bali bombings were Australian.
Australian foreign minister Alexander Downer said he feared Ba'asyir could incite further violence.
Mr Downer said that Australia and the US regarded Ba'asyir as an extremist and wanted his travel restricted and financial assets frozen.
One survivor of the Bali attacks, Australian Peter Hughes, said he reacted with "total disbelief" to the news.
"All of a sudden he's back out, we're just devastated," he told the BBC.
A US embassy spokesman in Jakarta said that the US had been "deeply disappointed" by the length of the cleric's sentence.
In Jakarta, a crowd of police, journalists and cheering supporters gathered outside the prison to see Ba'asyir emerge.
He was thought to be travelling straight to his home town of Solo, in central Java, where he runs an Islamic school.
Supporters crowded round as Ba'asyir was bundled into a car
Wearing his trademark white skullcap and thick spectacles, the elderly cleric tried to give a brief speech, but his voice was barely heard among the shouting.
"I will continue to fight to uphold the Islamic Sharia," he said, thanking Allah and his lawyers for continuing to support him, the Associated Press reported him as saying.
Ba'asyir was first arrested shortly after the Bali nightclub bombings in October 2002, although he was never accused of taking part in the attack.
He faced two separate trials, eventually serving two separate sentences, the first for minor immigration offences, the second for being part of what the court called an "evil conspiracy". In both cases more serious charges were either dropped or later overturned on appeal.
The 68-year-old cleric has said that once released he planned to return to the boarding school he founded and to continue teaching.
Indonesian and foreign intelligence agencies believe Ba'asyir was, and perhaps still is, the spiritual leader of radical network Jemaah Islamiyah.
Members of JI are accused of being behind a number of operations in Indonesia, including two suicide attacks in Jakarta and the 2002 and 2005 Bali bombings.
The BBC's Jakarta correspondent, Rachel Harvey, says Ba'asyir's power lies in his ability, as a charismatic preacher and teacher, to provide encouragement - and some would argue ideological justification - for violence.
However, many experts believe his influence within JI has waned, and the situation has changed hugely since he was imprisoned.
JI's network is fractured, split between those who espouse violence as part of what they say is legitimate and necessary jihad, and those who believe in a longer term struggle requiring patient proselytizing and military preparation, our correspondent says.