A Russian court has ordered the release from house arrest of the renowned film and theatre director Kirill Serebrennikov, who is on trial on embezzlement charges.

On Monday, a Moscow city court judge overturned a decision by a lower tribunal last week to extend his arrest for three months, Serebrennikov’s lawyer said.

The 49-year-old head of Moscow’s Gogol Centre theatre – who supporters say is facing politically motivated charges – has been detained since August 2017.

He would now be able to work and communicate, as long as he stayed in Moscow, his lawyer Dmitry Kharitonov said.

“He can leave the apartment, he will be able to work, but he cannot go beyond Moscow,” Kharitonov said, adding that the defence was pleased with the decision. “There are no limits on his communication.”

Under the conditions of his house arrest, Serebrennikov was able to spend only limited time outside his apartment, for example when going to the gym, making work nearly impossible.

Speaking to the Russian news agency Interfax, Serebrennikov said he planned to return to work.

“I will celebrate now but will return [to work] very soon. It’s not easy psychologically but there is so much to do. We have stagings and rehearsals,” he said.

His co-defendants Sofia Apfelbaum and Yury Itin were also freed from house arrest by the court decision on Monday. A fourth defendant, Alexei Malobrodsky, was freed from house arrest last May.

Serebrennikov was accused of creating an organised criminal group with his colleagues, embezzling more than $2m (£1.5m) of state funding for a theatre project called Platforma.

He has insisted the money was used properly and called the charges “absurd”.

“I have not and do not consider myself guilty,” he told a Moscow court in November last year.

His detention sent shockwaves through the Russian arts world and beyond, and the Hollywood actor Cate Blanchett has been among those calling for the charges against him to be dropped.

Serebrennikov has remotely directed several plays during the detention.

His new opera – a modern take on Verdi’s Nabucco – premiered in Hamburg last month. He sent instructions to singers and set designers on a USB stick through his lawyer.

He also missed the premiere of his much-praised film Summer at the Cannes film festival last year.

Two of his Russian productions, an opera and a play, are nominated for prizes in the upcoming Golden Mask festival.

Serebrennikov was born in Rostov-on-Don, a southern Russian city not far from the border with Ukraine.

In 2012, he was appointed as the director of the small state-funded Gogol Centre, which he turned into one of Moscow’s best theatres and a favourite of the capital’s liberal intelligentsia.

But his appointment and work angered cultural conservatives. For many, Serebrennikov’s frequent use of onstage nudity and obscene language as well as modern adaptations of Russian classics were a step too far.