Izzydeen Atik, 25, was in custody awaiting trial for belonging to and supporting a terrorist organization.
Magistrate Paul Smith granted him supervised bail till Sunday evening, ABC News Online reported. Smith said the circumstances were exceptional, as Atik's brother was expected to have only hours to live.
"We try to maintain a humane society," The Age quoted Smith as saying. "Mr. Atik has not been convicted of anything."
The charter flight was necessary, as no commercial airline was willing to transport the suspected terrorist.
Police were concerned about having to escort Atik and provide security at both the Melbourne and Sydney airports, as well as at the hospital.