A Cairo court has released journalist Peter Greste's Al Jazeera colleagues Mohamed Fahmy and Baher Mohamed after more than 400 days in jail, but the court says the case against them is still pending.

Famhy had renounced his Egyptian citizenship, hoping the fact he is also a Canadian would mean he would be deported like Greste.

Instead, he was asked to deposit about 250,000 Egyptian pounds ($42,000) to be freed on bail.

Canada said the prospect of Fahmy being retried was unacceptable.

Mohamed, who has only Egyptian citizenship, was released without making a deposit.

The courtroom erupted in applause after the judge read his decision, delivered after a brief recess.

Fahmy's fiancee, Marwa Omara, weeping and hugging journalists in the courtroom, said: "Thank you Egypt for doing the right thing... I am happy. For the last year I haven't been able to sleep."

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Speaking to the ABC, Ms Omara could barely choke back tears of relief.

"I'm very happy and it's time for me and for Mohamed to be relaxed," she said.

"We've suffered a lot. It's a rebirth for me and for Mohamed."

Baher Mohamed said on his Twitter account, @Bahrooz, "I AM FREE".

He was also reunited with his delighted wife, Jihan.

"I'm very happy," she said.

"It's been very tough for more than a year now. But today marks a new beginning."

The two journalists must appear for another hearing on February 23.

When an appeals court ordered this retrial it found the prosecution had failed to make its case that the Al Jazeera journalists had aided the banned Muslim Brotherhood. Their families now hope they could be acquitted.

Al Jazeera said it was "a great, great day" immediately after they heard that their reporters had been freed.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 3 minutes 41 seconds 3 m 41 s Al Jazeera journalists freed on bail in Egypt ( Matt Brown ) Download 6.7 MB

Head of newsgathering at Al-Jazeera English, Heather Allan, said just minutes after the news of their release: "We are very grateful. This is a great, great day for us and we just hope that ... the whole thing is thrown out."

The pair had been in jail for 411 days but have been released from prison pending their retrial for allegedly supporting the banned Muslim Brotherhood.

The court had earlier heard Fahmy's defence demanding he be freed like his Australian colleague Peter Greste.

The wife of Baher Mohamed, Jihan, after the court decision to release the Al Jazeera journalist. ( Twitter: Matt Brown )

Fahmy and Egyptian Mohamed appeared in white prison uniforms before the court in Cairo after Greste was freed and sent home earlier this month.

Greste himself was on the judge's roll call of defendants at the start of the trial.

"He's not here sir," responded a police officer when the judge called out his name.

Greste could be tried in absentia, although he was deported under a presidential decree that technically ended his trial in Egypt.

The court may simply drop the charges against him.

Case a major embarrassment for Egyptian president

The three journalists had been sentenced to up to 10 years in prison but an appeals court ordered a retrial saying the prosecution had failed to prove its case.

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They had been charged with aiding the banned Muslim Brotherhood in their coverage and spreading false news about the government's deadly crackdown on the Islamists.

Their arrests and continued detentions sparked widespread condemnation and calls for their release led by Washington and the United Nations.

The journalists were among 20 defendants initially tried.

Of the rest, 12 were Egyptians found guilty of belonging to a "terrorist organisation".

Two defendants were acquitted, while the other three - also foreigners - were convicted in absentia.

The journalists' initial trial came against the backdrop of strained ties between Egypt and Qatar, which supported ousted president Mohamed Morsi.

The Islamist leader was toppled by then army chief Abdel Fatah al-Sisi in July 2013, before Mr Sisi was himself elected president.

While Fahmy may still be deported - although that appears less likely once the trial starts - Mohamed's only hope is for an acquittal.

Mr Sisi's office has said the president will not consider a pardon before the courts have finished their work.

The case has been a major source of embarrassment for Mr Sisi as he seeks to shore up international support following a widely condemned crackdown on the opposition.

Mr Sisi passed a law by decree last year allowing foreigners to be deported to their home countries to stand trial or serve out their sentences.

Mohamed's wife Jihan Rashid said the family is "paying the price for being Egyptian".

AFP/Reuters