Former IMF Chief Dominique Strauss-Kahn arrives at a Manhattan courthouse July 1, 2011 in New York City. Strauss-Kahn, arrested on May 14, on sexual assault charges, is back in court for a bail hearing amid new reports surrounding the accuser's credibility. -AFP Photo

NEW YORK: Former IMF chief Dominique Strauss-Kahn was freed from house arrest Friday after prosecutors raised serious doubts about his accuser's credibility, including that she lied to the grand jury.

The sensational twist raised French opposition hopes that the sexual assault case will collapse and the Socialist heavyweight could return to politics, possibly even as a candidate to fight Nicolas Sarkozy for the presidency in 2012.

Strauss-Kahn looked relaxed and cheerful as he left court, smiling, his arm on the shoulder of wife Anne Sinclair. But prosecutors stressed that the charges stood and Judge Michael Obus told the courtroom, “the case is not over.”

The credibility of the Guinean hotel maid at the center of the sexual assault and attempted rape allegations was shattered by the revelation that she lied to the grand jury.

According to the alleged victim's initial story, she immediately fled Strauss-Kahn's luxury Manhattan hotel suite after the attack and waited in the hallway before informing a supervisor.

“The complainant has since admitted that this account was false and that after the incident in Suite 2806, she proceeded to clean a nearby room and then returned to Suite 2806 and began to clean that suite before she reported the incident to her supervisor,” prosecutors said in court filings.

The alleged victim's lawyer admitted his client had made “some mistakes,”but cast doubts about her credibility as a “lie” and insisted substantial forensic evidence would prove Strauss-Kahn violently assaulted her.

Despite his defiance, the lawyer, Ken Thompson, voiced fears the district attorney's office was “laying the foundation to dismiss this case.”

Strauss-Kahn, shorn of his ankle monitoring bracelet, can now travel freely in the United States pending trial and his $1 million bail and $5 million bond were returned, although authorities held on to his passport and he was ordered to return to court for his next scheduled hearing, on July 18.

The prominent French politician resigned from his post at the world's crisis lender to fight charges that he sexually assaulted and attempted to rape a hotel maid in his luxury hotel suite in Manhattan on May 14.

Doubts over the maid's credibility mark a stunning reversal in the case that has upended politics in France and prompted a change in leadership at the International Monetary Fund at a time of major upheaval in the eurozone.

Word that the case might implode has raised hopes among France's opposition Socialists that a vindicated Strauss-Kahn might return to help them drive Sarkozy from office in next year's elections.

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