Hafiz Saeed, head of the Pakistani religious party, Jamaat-ud-Dawa, waves to his supporters at a mosque in Lahore, Pakistan. Picture: K.M. Chaudary/AP

Islamabad - Pakistani authorities have released a cleric blamed by the United States and India for the 2008 terror attacks in Mumbai, after a court rejected the government's plea to extend his house arrest, his spokesman said on Friday.

Hafiz Saeed, chief of the Jamaat-ud-Dawa group, walked free overnight Thursday after authorities in the central province of Punjab withdrew police from his house where he was detained, his spokesman Ahmed Nadeem told dpa.

Jamaat-ud-Dawa is thought to be a front for the militant Lashkar-e-Toiba group. That organization's fighters killed more than 160 people in the Indian city of Mumbai in 2008 in commando-style gun-and-grenade attacks.

Saeed, who has a 10-million US-dollar bounty on his head for the attacks, in which six Americans were killed, has denied his involvement.

The US State Department said on Friday said it was "deeply concerned" to learn that Saeed had been released.

Spokeswoman Heather Nauert said that Lashkar-e-Toiba "is a designated Foreign Terrorist Organization responsible for the death of hundreds of innocent civilians in terrorist attacks, including a number of American citizens."

In a video message overnight, Saeed said his release was a victory for truth.

"I'm happy that nothing has been proved against me. India has been lobbying against me," the militant leader said.

A Pakistani court on Wednesday rejected the government plea seeking to extend Saeed's detention for another three months on the grounds that his release would undermine public safety.

He was put under house arrest in January but was never charged. Authorities had kept him detained under a public safety law allowing the government to detain suspects temporarily.

His release comes two weeks after the US Congress approved a bill stating that the American administration would not pressure Pakistan to take action against Lashkar-e-Toiba for counter-terrorism reimbursements.

It is not clear whether the two developments are linked.