• Michael Moore offers to bail out Julian Assange
• Most Americans critical of WikiLeaks
• Assange granted bail in London - wearing electronic tag

LONDON, December 14, 2010 (AFP) - WikiLeaks founder Julian Assange will have to stay in prison after lawyers acting for Sweden said on Tuesday they would challenge bail granted earlier by a London court.

Lawyer Gemma Lindfield told City of Westminster Magistrates' Court that Swedish prosecutors intended to challenge the bail order.

The appeal is expected to take place within 48 hours.

In a chaotic 30 minutes outside the court, Assange's lawyer Mark Stephens had earlier wrongly told reporters that Sweden would not appeal the granting of bail for the Australian who founded the whistleblowing website.

Julian Assange was granted conditional bail by a British judge Tuesday, one week after he was arrested in London to answer allegations of rape and molestation in Sweden.

The 39-year-old Australian, who denies the charges, gave a thumbs-up to the packed courtroom as the decision was read out, although his release was postponed for several hours to allow prosecutors to decide whether to appeal.

District judge Howard Riddle granted bail worth 240,000 pounds (378,000 dollars, 283,000 euros) but ordered that Assange wear an electronic tag, abide by a curfew and live at the country estate of a supporter.

"I am satisfied that the conditions I am going to impose will make it certain as far as the risk of flight is concerned," Riddle said.

Assange's high-profile lawyer Geoffrey Robertson told the court that the allegations made against the founder of the whistleblowing website by two Swedish women should not be taken seriously.

"It was very clear this is not an extremely serious offence. It is arguably not even a rape offence," he said.

He added that Assange had been held in "Victorian" conditions in Wandsworth prison in London, detained in solitary confinement and allowed just one visit per week.

The announcement of bail -- which followed Riddle's decision last week to refuse it -- prompted cheers from supporters who had staged a protest in support of Assange outside court.

About 20 people held up placards saying: "Exposing war crimes is no crime."

Lawyers representing Sweden were given two hours to decide whether to appeal the bail order.

Assange was arrested on December 7 after giving himself up to police acting on an extradition warrant from Sweden, where he is wanted for questioning over allegations of sex crimes against two women.

His legal team has condemned the claims as politically motivated, noting their timing with WikiLeaks' release of thousands of secret US documents.

Swedish prosecutors say their investigation is based on law.

Speaking outside court afterwards, campaigning journalist John Pilger said: "I feel elated that he is very close to freedom, as he should be."

He added: "I think there are threats to Julian, Julian has made some serious enemies, all for the right reasons."

Earlier, Assange blasted three global giants which have stopped money being sent to his website -- credit card companies Visa and MasterCard and the Internet payment firm PayPal -- and accused them of being US puppets.

PayPal has insisted its decision to restrict the WikiLeaks account was not the result of any US pressure, but the firms have been attacked by computer hackers for their stance.

In a statement to Australia's Channel 7, dictated by his mother Christine Assange, he also said WikiLeaks would not stop releasing the data, which has caused a diplomatic global storm.

"My convictions are unfaltering. I remain true to the ideals I have expressed," he said. "These circumstances shall not shake them. If anything, this process has increased my determination that they are true and correct."

Christine Assange, who travelled to London to be with her son, was not able to see him face-to-face but they spoke on the telephone for 10 minutes and he said he was being kept in a basement cell in solitary confinement.

US President Barack Obama has led worldwide condemnation of the leaks, dubbing them "deplorable" and potentially dangerous for US diplomats, and Washington is pursuing a criminal investigation into how WikiLeaks obtained the information.

One of his lawyers, Mark Stephens, said in an interview with Al Jazeera that a secret US grand jury has been set up in Virginia to work on charges that could be filed against Assange over the leak.

There has been a groundswell of support for Assange since his arrest.

Worldwide, more than 600,000 people have signed a petition in support of WikiLeaks on campaigning website Avaaz, and the leader of Lebanon's druze community, Walid Jumblatt, even called for Assange to receive a Nobel prize.

Meanwhile in Australia, newspaper and television chiefs issued an open letter condemning their government's "deeply troubling" response to the WikiLeaks release, after Prime Minister Julia Gillard dubbed it "illegal".