It also said the High Court had insufficient proof that Chen was still hiding huge funds abroad and was able to use diplomatic channels he built up during his time as president to sneak out of Taiwan.

As a retired president, he still had 24-hour bodyguard protection until his corruption conviction was finalised by the Supreme Court. This would make it difficult for him to flee, the court added.

'For these reasons, we have resolved to override the High Court's ruling and ordered the High Court to hold another hearing on the defendant's bail request,' the Supreme Court said.

Chen, who has been held at Taipei Detention Centre since December 30, was convicted of embezzlement, accepting bribes, money laundering, influence peddling and other offences along with his wife, Wu Shu-chen, by Taipei District Court on September 11. The district court sentenced the couple to life imprisonment and imposed fines totalling NT$500 million (HK$121 million) on the pair.

In its September 24 bail hearing, the High Court ruled that Chen must continue to be held, as the life imprisonment sentence was serious enough to encourage him to use all kinds of methods to flee.

Chen later hired three lawyers for his appeal. One of them, Shih Yi-lin, hailed the Supreme Court's decision yesterday.

'How would it be possible for the ex-president to sneak out given that there is 24-hour bodyguard protection for a retired president?' he said, adding that Chen had already surrendered his passport to the District Court.

Dozens of Chen's supporters rallied outside the High Court building, demanding his immediate release. They encountered a group of his opponents, who condemned the Supreme Court's decision.