A court on Tuesday rejected prosecutors' request that an Austrian army colonel suspected of spying for Russia for 26 years be remanded in custody pending trial.
"There is no flight risk," the court in Salzburg handling the prosecutors' request said in a statement.
Austrian Chancellor Sebastian Kurz announced on Friday that the suspected espionage case had been uncovered and handed over to prosecutors. It follows other suspected Russian espionage cases in Europe that have heightened tensions with the West.
The case is embarrassing for Austria, one of the few European Union countries that did not expel any Russian diplomats over the poisoning in Britain of former spy Sergei Skripal and his daughter. London blames the attack on Moscow, which denies any involvement.
Citing its tradition of neutrality, Austria has sought to maintain good relations with Moscow and has been arguably its closest ally in the EU, hosting Russian President Vladimir Putin twice since the nerve-agent attack on Skripal, angering British and other Western officials.
Prosecutors say they believe the now-retired officer committed crimes including disclosing state secrets from 1992 until the end of September this year. The court said the suspicions were credible but there was no need to hold him until trial.
"The accused is very well socially integrated in Austria, has had a fixed abode in the country since 1987 and has not fled until now, even though he has known of the ongoing investigation against him for two months," the court said.
The colonel was arrested on Friday night, a spokesman for the Salzburg prosecutors' office said.
Austria has said the case was brought to its attention by an allied country's intelligence agency. Officials have since said that country was Britain.
The court also rejected prosecutors' argument there was a risk the colonel, whom it did not name, could commit more crimes if he were not detained. As he was retired, it could be assumed he did not have any more secret information to pass on, the court said in its statement.