The Capital City Court said that the captain, identified earlier only as Yuriy C., isn't allowed to leave Budapest, must wear an electronic tracking device and meet twice a week with investigators.
The captain's Viking Sigyn cruise ship collided with the Hableany (Mermaid) during a rainstorm on the night of May 29 at Margit Bridge, near the Hungarian Parliament building. The Hableany was raised out of the Danube on Tuesday and later inspected by police.
The Viking Sigyn's captain was arrested for 30 days on June 1, with bail set at 15 million forints ($52,600), but remained in custody while an appeals court decided on a motion by prosecutors objecting to his release. The appeals court rejected the prosecution's request on Tuesday.
Despite his release, the captain will be under police surveillance until a decision is made about a court hearing, but for a maximum of four months, the Budapest court said.
Meanwhile, Budapest police said that the body of a South Korean man had been recovered in the Danube River, raising the death toll to 25, including 23 South Koreans and the Hableany's two-man Hungarian crew.
Police said the body was found Wednesday between the villages of Bolcske and Madocsa, about 100 kilometers (60 miles) downstream from the scene of the collision.
Three South Koreans remain missing and seven were rescued.
The bodies of four victims - including the boat's Hungarian captain and a 6-year-old South Korean girl, the collision's youngest casualty - were recovered from the Hableany on Tuesday as it was being raised by a floating crane. Police said no more bodies were found in the ship's hull after its inspection at a dock on Csepel Island, in south Budapest.
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