Monsignor William Lynn, who's spent about 18 months in prison, would have to submit to electronic monitoring and surrender his passport.
Lynn has been serving a three- to six-year sentence after being the first U.S. church official ever convicted over his handling of abuse claims against other priests.
A three-judge appellate panel threw out his conviction last week, saying Lynn was tried under a child-endangerment law that didn't apply to him. On Monday, the defense lawyers asked Judge M. Teresa Sarmina to release the 62-year-old priest while prosecutors appeal.
Lynn did not attend the hearing, in which prosecutors argued that he was a flight risk. Defense lawyer Thomas Bergstrom called that contention "a fantasy."
"There's not a chance in the world he's going to flee," Bergstrom said.
Lynn is the former secretary for clergy in the Philadelphia archdiocese, a post he held from 1992-2004, mostly under Cardinal Anthony Bevilacqua. His three-month trial last year revealed that top officials at the archdiocese kept hundreds of abuse complaints in locked secret archives, overseen by Lynn, rather than report them to police or parishes.
"William Lynn is no patsy. He is no fall guy," said Philadelphia District Attorney Seth Williams, who vowed to appeal the Superior Court decision by next month's deadline. "He is a cold, calculating man who endangered the welfare of countless children for decades by moving known predators throughout the Archdiocese of Philadelphia."
Defense lawyers have long argued that prosecutors wrongly applied a 2007 law to indict Lynn retroactively. Sarmina and another judge both rejected the argument. The defense then petitioned the state Supreme Court to review the issue before trial, without success. Lynn was convicted of endangering one victim - although acquitted of conspiring with the young man's abuser, the Rev. Edward Avery.
He has served most of his time at a state prison in Waymart, in northeastern Pennsylvania. Lawyers say he has held up well in prison and has lost 70 pounds.
Sarmina, who had blasted Lynn at his July 2012 sentencing, said she wrestled with the decision to grant bail Monday. But she acknowledged that she could have been wrong to interpret the pre-2007 law broadly, as prosecutors did.
"If the conviction is in question, is not the punishment in question?" she asked. "After all, I am fallible."
Williams' predecessor had investigated clergy abuse at the archdiocese for three years and taken lengthy, heated grand jury testimony from Lynn, Bevilacqua and other top clerics before concluding in 2005 that laws then on the books did not cover their actions.
The sordid abuse detailed to the grand jury also was too old to prosecute. The Pennsylvania Legislature, like others around the country, amended child sex-abuse laws in 2007. The changes gave victims more time to come forward and let prosecutors charge those who supervise predators and hide their crimes with child endangerment.
Bergstrom believes the state Supreme Court won't be interested in Lynn's case, because it involves the pre-2007 law and is unlikely to affect other cases.
"I think it's a fool's errand," he said of Williams' promised appeal. "Cases going forward will be brought under the new statute. ... The old statute's history."
But Assistant District Attorney Hugh J. Burns Jr., the appeals unit chief in Williams' office, bristled when asked if the case is moot.
"This case established that people inside the hierarchy, people in authority, who tried to cover it up could be investigated and prosecuted," Burns said. "If this isn't (upheld), we're losing ground. We're taking a step back."