Latorre is facing murder charges for killing Indian fishermen.
The apex court bench headed by Chief Justice RM Lodha said the order would be effective only after the Italian marine has filed an "unequivocal and unambigous undertaking" on his return to India upon the completion of four months.
The apex court had on September 8 also exempted for two weeks Massimiliano Latorre, who suffered brain stroke on August 31, from appearing before the Chanakyapuri Police Station once a week as a condition of his bail.
Senior advocates Soli Sorabjee and KTS Tulsi appeared for the Italian marines Salvatore Girone and Lattore. The court was told that the Italian ambassador was willing to give any guarantee for Lattore's return.
The two marines have been held in India since February 2012 when they allegedly shot dead two Indian fishermen off Kerala, mistaking them for pirates.
The marines were serving as security personnel on Italian oil tanker MT Enrica Lexie that was crossing the Indian Ocean.
India claims jurisdiction in the case while Italy alleges that the incident took place in international waters and that the Marines should be tried in their home country.
With IANS inputs,