The court agreed to free Strauss-Kahn from a New York City jail on bail terms of USD 1 million in cash and also on the condition that he would remain under house arrest in a Manhattan apartment under the watch of armed guards.
Strauss-Kahn is allowed to stay with his wife in the apartment.
On Jun 6, the court will hold an arraignment hearing in which the exact charges will be revealed.
The former IMF chief, who was indicted on all seven counts, is accused of groping and mauling a Guinean maid in his room at Sofitel hotel in Times Square and forcibly tried to have oral sex with her.
Since, prosecutors have argued that he is at flight risk, Strauss-Kahn has to wear an electronic monitoring device and he will be monitored by armed guards at his own expense.
Strauss-Kahn, however, has to spend one more night at the Rikers Island prison where he being held since Monday. He also has to provide USD 5 million as collateral and turn over all his travel documents.
62-year-old Strauss-Kahn looked tired as he sat in court wearing a blue shirt and gray jacket without a tie. His wife, Anne Sinclair, a French TV journalist, was present in court along with their daughter.
Prosecutors had cited the example of film director Roman Polanski, who fled from the US in 1977 after admitting to engage in unlawful sex with a minor. Strauss-Kahn, however, has given up his extradition rights, which he is granted as a French citizen.
On Saturday, he was pulled off a Paris-bound flight minutes before take-off and was taken into custody at New York's JFK airport.
Strauss-Kahn denied wrongdoing and is expected to plead not guilty. His lawyers have also said that the sex was consensual.
Yesterday, Strauss-Kahn resigns from the IMF.
Strauss-Kahn, a socialist politician, was seen as a possible contender in the 2012 presidential elections in French.