The Bombay High Court said that Aseem Trivedi could be released on bail on a surety of Rs 5,000.
Tuesday saw Trivedi first refuse to accept the bail and hours later accept it and say that he would execute the bond on Wednesday.
The cartoonist said, "I respect judiciary, will execute the bail bond tomorrow."
It is believed the change of heart took place after Maharashtra Home Minster R.R. Patil gave an assurance that he would examine the case against him,
The bench was hearing a PIL filed by advocate Sanskar Marathe claiming that Trivedi's arrest and slapping of sedition charges against him was illegal and unjustified.
The petitioner has sought Trivedi's release from jail. Trivedi was arrested on Saturday for his cartoons which allegedly depicted the national emblem and parliament in a bad light. Trivedi is now in judicial custody after the police yesterday surrendered their custody of the cartoonist.
The High Court had earler on Tuesday said that it would order the release of the cartoonist on bail if the police failed to provide sufficient ground for his custody.
A division bench of chief justice Mohit Shah and justice Nitin Jamdar gave an hour's time to the police to seek instructions from higher authorities on whether his custody is required.
Meanwhile, the state Home Minister on Tuesday said the decision on withdrawing charges against Trivedi would be taken after the investigation was over.
Patil told reporters here that he had asked Mumbai police commissioner to find out what action could be taken against the cartoonist, who was arrested for allegedly objectionable cartoons of the national emblem and the Parliament.
"Action will be taken in accordance with the existing laws. There will be no discrimination," he said.
The Home Minister also added that it was the investigating agency which had pressed sedition charges against Trivedi, and not the state government. Nor was the government under any pressure, and police too were not putting pressure on Trivedi to seek bail, Patil said.
The Kanpur-based Trivedi had surrended to the police in Mumbai on Saturday and sent to judicial custody till September 24 Monday for allegedly uploading "ugly and obscene" matter on his web portal and putting up objectionable banners insulting the constitution during Anna Hazare's protest in 2011.
Trivedi had the option of seeking bail even earlier, but refused to do so, saying that he was not a criminal. Yesterday, the state Home Minister R R Patil had told media persons that there was no need to keep Trivedi in police custody, and that his culpability would be decided by court. He promised to oversee the investigation personally.