The High Court has granted bail for a Donegal man, wanted in Northern Ireland in connection with the murder of two British soldiers in 1972.

Alleged IRA bomber John Downey was arrested at his home on Monday on foot of a European arrest warrant.

Two soldiers from the Ulster Defence Regiment (UDR) died when a car bomb went off in Enniskillen, Co Fermanagh in 1972.

In June, authorities in Northern Ireland decided to prosecute John Downey on two charges of murder and a charge of aiding and abetting an explosion.

Before the High Court in Dublin on Thursday, he applied for bail ahead of the hearing of an extradition application - which he intends to contest later this month.

Gardaí objected claiming he is now a flight risk because of the gravity of the offences and the likely sentences if convicted.

But Mr Downey barrister claimed he had no history of bench warrants, and abided by all bail conditions when he was on trial in the Old Bailey in London for the alleged murders of four soldiers in the Hyde Park bombings in 1982.

That trial collapsed when it emerged Mr Downey had been given a letter of immunity in 2007 - a letter that will again be used to fight his extradition.

The letter was issued under the so-called 'On The Run' scheme. It assured Mr Downey that he was not wanted by British authorities. 

Mr Downey's bail was set at €30,000.

He will be free to go as soon as he finds a second suitable person to put forward half that amount on his behalf.