The 47-year-old former SAS soldier was sensationally arrested on April 7 and charged with murdering five unarmed detainees while deployed in Afghanistan between 2009 and 2012.
He made his successful application for bail at Sydney's Downing Centre Local Court on Friday.
Roberts-Smith wore prison-issued green clothing and appeared by audiovisual link from Silverwater prison.
In front of a packed public gallery, Judge Greg Grogin approved the bail bid.
He said bail conditions would mitigate any risk of flight or witness interference.
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.
Mr Howell highlighted the exceptional nature of a highly respected soldier such as his client facing five counts of war crime murder in a civilian court.
Crown prosecutor Simon Buchen SC opposed bail, saying the charges against Roberts-Smith were gravely serious and the case against him was strong.
While he acknowledged that bail conditions would prevent the 47-year-old from fleeing the country, the prosecutor said they could not prevent the risk of witness tampering.
Evidence that emerged in the Federal Court defamation trial included threatening witnesses, distorting evidence and using burner phones to evade authorities, he said.
Roberts-Smith is accused of directly murdering two Afghan individuals and aiding, abetting or procuring the murder of three more.
War crime allegations against Roberts-Smith were first exposed by the now Nine-owned Fairfax Media in 2018.
The war veteran sued the paper for defamation in the Federal Court but suffered a crushing defeat with a judge finding the accusations of murder were, on the balance of probabilities, true.
He failed to overturn these findings on appeal to the full Federal Court and the High Court.
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