The granting of bail appeared a major setback for her successor, Benigno Aquino, who has said that bringing Arroyo to justice for crimes she allegedly committed while in power is crucial to his high-profile anti-graft campaign.
Aquino won the 2010 presidential elections in a landslide after campaigning to wipe out corruption that he said crippled Philippine society during the nearly 10 years Arroyo was in power.
Arroyo's spokesman, Ferdinand Topacio, described the ruling on Wednesday morning from a Manila court as "a triumph of justice and a resounding denial of dictatorship" that proved her earlier assertions of innocence.
"It is a reaffirmation of what our camp has been saying all along," Topacio said, before borrowing from a quote by former US president Abraham Lincoln.
"That the charges against the former president are as thin as the soup made from boiling the shadow of a chicken that has been starved to death."
Arroyo, 65, was arrested at an exclusive hospital in November last year shortly after immigration authorities blocked her at Manila airport from leaving the country.
Aquino had said Arroyo was trying to flee the country to escape imminent charges against her, although she said she needed specialist treatment overseas for her spinal disease.
Arroyo was charged shortly after with "electoral sabotage" for allegedly conspiring with a feared political warlord to rig the 2007 senatorial elections.
She was then transferred to the military hospital, where she had been detained while awaiting trial. No date has yet been set for the start of the trial, which could take years to complete.
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