Chile's Supreme Court set $3,000 bail for Fujimori, 67, detained while Peru tries to extradite him to face human rights abuse and corruption charges. Under conditions of the bail, he cannot leave Chile.

Fujimori, who is both revered and reviled in Peru, came to Chile by surprise in November from Japan, where he lived for five years to avoid prosecution in Peru after his 1990-2000 government collapsed following a huge corruption scandal.

"Obviously I'm happy, satisfied with the decision of the superior court. ... I'm confident and I'll have patience," a smiling Fujimori, dressed in a dark suit, told dozens of reporters outside the Prison Guard Academy in Santiago.

He was whisked away to a house rented for him in the upscale Las Condes neighborhood of the Chilean capital.

A small group of protesters, accusing the former leader of authorizing death squads to defeat Shining Path rebels, held a banner that read "Fujimori genocide."

In Lima, hundreds of people protested against the court's decision outside the Chilean embassy, shouting "murderer."

Fujimori, of Japanese descent, is accused of stealing $15 million in state cash and using excessive anti-terrorism measures to crush Shining Path. He denies any wrongdoing and says he is the victim of political persecution.

Credited with defeating Shining Path and controlling the hyperinflation that ruined Peru's economy in the 1980s, Fujimori is a hero to poor Peruvians who say he brought electricity, roads and schools to remote Andean towns.

But lawyers for the Peruvian state say granting him bail was a mistake and Peru's Justice Minister Alejandro Tudela he did not agree with the Chilean decision.

"This ruling raises the possibility for Fujimori to escape," said Alfredo Etchberry, a lawyer for the Peruvian government.

Media in Lima reported there were also fears Fujimori could try to take refuge in the Japanese Embassy in Santiago.

"We don't want to even think about that possibility," Tudela told a news conference.

'NOT A DANGER TO ANYONE'

Fujimori's lawyer Cesar Nakazaki said Peru's government was overreacting. "Let's not exaggerate. We're talking about a conditional release so that Alberto Fujimori can face the extradition proceedings in better conditions," Nakazaki said.

When he arrived in Santiago last year, Fujimori said he had chosen Chile because its courts are seen as the most impartial in the region. He said he wanted to use Chile as a base to run for president in Peru, even though he is banned from holding public office there until 2011.

"I think that this (bail) is obviously of concern because of ... the resources he has at his disposal and there is clearly a risk that he could jump bail here," said Sebastian Brett, a researcher with the group Human Rights Watch.

In April, while being held in Chile, Fujimori married his wealthy girlfriend, Japanese businesswoman Satomi Kataoka.

"This is one of the happiest days in a long time for me," Fujimori's daughter Keiko, elected to Peru's next Congress, told a news conference. "The superior court's decision reaffirms that my father is not a danger to anyone," she said.