Jamaat-ud-Dawa has been accused of being a front for the Lashkar-e-Taiba network, which is thought to have been behind last November's attack on Mumbai, in which about 170 people were killed.

India was "unhappy" with Saeed's release.

Palaniappan Chidambaram, India's interior minister, said: "We are unhappy that Pakistan does not show the degree of seriousness and commitment that it should to bring to justice the perpetrators of the crime."

House arrest

Saeed was among four people put under house arrest late last year and questioned in connection with the attacks, which India has said were carried out by fighters based in Pakistan.

His detention came after a UN Security Council committee added him and Jamaat-ud-Dawa to a list of people and organisations linked to al-Qaeda or the Taliban.

He founded Lashkar-e-Taiba in 1989 but reportedly abandoned the group when it was outlawed in Pakistan after India alleged it was behind a 2001 attack on the Indian parliament.

Jamaat-ud-Dawa is one of Pakistan's biggest charities and is known across the country for its relief work after the 2005 earthquake in Kashmir.

'Relief organisation'

A spokesman for Saeed said the court order proved the charity had no links to groups such as al-Qaeda.

"The government has been defeated. Our innocence has been proven," Yahya Mujahid, the charity's spokesman, said.

"Ours is a relief organisation. The decision has proved that we have nothing to do with terrorism. We were on right path and it has been proved ... Nothing has been proved against us."

Pakistani investigators have acknowledged the co-ordinated attacks in India's financial capital were launched and partly planned from Pakistan's soil, and that the man suspected of being the sole surviving attacker was Pakistani.