Islamabad, Pakistan: A Pakistani court on Friday freed on bail Zaki-ur-Rehman Lakhvi, accused of plotting a 2008 militant assault on India's financial capital Mumbai that killed 166 people and seriously strained ties between the nuclear-armed neighbours.

Indian Prime Minister Narendra Modi had condemned the prospect of bail for Zaki-ur-Rehman Lakhvi, which comes months after India and Pakistan were engaged in their worst cross-border violence in more than a decade in the disputed Kashmir region.

‘Lakhvi has been released and he is out of the jail now,’ his lawyer, Malik Nasir Abbas, told Reuters on Friday. ‘I don't know where he will go now’.

A security official also confirmed his release.

India's Ministry for External Affairs said before the release that its concern about Lakhvi had been made clear to Pakistan.

‘The fact is that known terrorists not being effectively prosecuted constitutes a real security threat for India and the world,’ an Indian ministry spokesman said.

‘This also erodes the value of assurances repeatedly conveyed to us with regard to cross-border terrorism’.

India blamed the Pakistan-based militant group Lashkar-e-Taiba for the Mumbai attack. Ten gunmen infiltrated the city by boat and spent three days spraying bullets and throwing grenades around city landmarks.

Indian investigators said Lakhvi was Lashkar-e-Taiba military chief.

He was arrested in Pakistan in 2009 in connection with the attack.

Relations between India and Pakistan, which have fought three wars since independence in 1947, nosedived after the Mumbai attack and have not fully recovered. A dispute over the Kashmir region periodically flares into violence.

Lakhvi was granted bail by an Anti Terrorism Court in Islamabad on 18 December, two days after a militant attack on a high school in the city of Peshawar killed 132 children.

The fact that he was granted bail just two days after an attack, that shocked a nation used to such atrocities, forced the government to detain Lakhvi under Maintenance of Public Order legislation.

His lawyer told Reuters his client has been granted bail because of insufficient evidence.