The 33-year-old American was last month released from a Queensland prison after serving 18 months for his wife's manslaughter. Watson was originally charged with murder, but the charges were downgraded to manslaughter and he pleaded guilty to failing to assist his wife when she was in trouble underwater.

During the bail hearing, prosecutor Don Valeska tried unsuccessfully to argue that it was up to Watson to prove his innocence. The judge rejected this argument and also said that the evidence against Watson was circumstantial.

After bail was granted, prosecutors sought an emergency hearing to appeal the decision.

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Under the bail conditions, Watson is required to wear an electric monitor and observe curfew between the hours of 7pm and 6am. Watson is allowed to continue working as a salesman in his father's company, but has been ordered not to travel outside Alabama, and surrender his passport.

Watson was also ordered not to have any contact with Tina Watson's family and to stay away from her gravesite.

Earlier this year, the ABC's Australian Story reported that Watson had used bolt cutters to remove flowers chained to his wife's grave and, in a display of bizarre behaviour, ordered her grave be moved to another plot not more than 50 metres from the original.

The prosecution in Alabama has made claims that Watson had planned to murder his wife on their honeymoon.