The 47-year-old former SAS soldier was arrested on April 7 and charged with murdering or ordering the murders of five unarmed detainees while deployed in Afghanistan between 2009 and 2012.
The Victoria Cross recipient successfully applied for bail at Sydney's Downing Centre Local Court on Friday, despite a judge hearing he had made moves to relocate overseas.
Roberts-Smith wore prison-issued green clothing and watched by audiovisual link from Silverwater prison.
In front of a packed public gallery which included the former soldier's parents Len and Sue Roberts-Smith, Judge Greg Grogin approved the bail bid, saying the strict conditions mitigated any risk.
The judge noted the consequences if Roberts-Smith approached any prosecution witnesses.
"His arrest would come very swiftly and he would find himself once again donned in green."
The ex-SAS soldier would have been hampered in his ability to defend the case from prison which did not have facilities for the secure transport, storage and discussion of highly classified defence material.
A surety of $250,000 will be forfeited to the court if Roberts-Smith does not comply with his bail conditions.
He will be allowed to travel from his Queensland residence to Sydney and Perth solely to consult with his legal team.
Earlier on Friday, defence barrister Slade Howell said his client would comply with stringent bail conditions despite previous Federal Court findings he had threatened or interfered with witnesses.
While Roberts-Smith had been making plans to relocate overseas, he was not a flight risk, the barrister said.
Mr Howell argued that a superior court might have to consider whether the extraordinary publicity surrounding the case has made a fair trial impossible.
Crown prosecutor Simon Buchen SC opposed bail, saying the charges against Roberts-Smith were gravely serious.
The case against Roberts-Smith was strong and there were eyewitnesses to the alleged murders, Mr Buchen said.
There was also evidence of the use of throw-downs, he said.
Throw-downs are objects placed onto deceased non-combatants to make it seem like they had taken part in hostilities.
While he acknowledged bail conditions would prevent Roberts-Smith from fleeing the country, the prosecutor said they could not prevent the risk of witness tampering.
An interim non-publication order has been made over the address where Roberts-Smith will reside on bail, plus the police station he will report to.
There was a real chance that people with strong opinions could use the opportunity to harm Roberts-Smith or those with him, Judge Grogin said.
A full hearing on these orders will take place on Thursday.
The 47-year-old has been accused of directly murdering two Afghan individuals and aiding, abetting or procuring the murder of three more.
He has consistently proclaimed his innocence.
He is accused of machine-gunning Mohammed Essa and ordering the execution of his son Ahmadullah to "blood the rookie" during a raid at a compound called Whiskey 108 in April 2009.
Ahmadullah had a prosthetic leg.
The then-SAS soldier placed firearms on the bodies to falsely claim they were enemy combatants, court documents seen by AAP say.
In August 2012 at the village of Darwan, Roberts-Smith is accused of kicking a hand-cuffed Ali Jan off a 10 metre cliff before ordering that he be dragged over a creek bed and shot.
Two months later at Syahchow, he allegedly lined up two prisoners in a corn field, shooting one of them with another soldier.
He ordered a subordinate to shoot the other before throwing a grenade on the bodies to cover up what he had done, court documents say.
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