Bernard Madoff avoided being remanded in jail yesterday after a federal court judge decided that the fund manager, who is alleged to have defrauded investors of $50 billion (£33.6 billion), was unlikely to flee the United States.

The decision means that Mr Madoff will remain under house arrest in his apartment in Manhattan, awaiting trial on charges of securities fraud.

Government prosecutors had tried to have Mr Madoff's bail revoked after he and his wife Ruth posted valuables worth more than $1 million to friends and family over Christmas.

The court had previously ordered a freeze on Mr Madoff's assets while investors attempted to recover their losses.

Ira Sorkin, Mr Madoff's lawyer, said that posting the family heirlooms was a mistake and had not been an attempt to hide assets in preparation for flight.

The items included Cartier and Tiffany watches, diamond jewellery and a $200 pair of mittens. Mr Sorkin said that the Madoffs had wanted to give to loved ones items collected over 49 years of marriage that they were unlikely to use again.

Prosecutors argued that the mailings were an attempt to hide his assets and indicated an increased risk that Mr Madoff would flee the country before he could be brought to trial.

Judge Ronald Ellis said yesterday that Mr Madoff, 70, must give the Government a list of any transportable assets.

A private security company would check regularly that the items remained in his possession.

Mr Sorkin said: “We intend to comply with the judge's order.”

Mr Madoff, who has admitted running a giant Ponzi, or pyramid, scheme, is due in court on February 11, when it will be decided whether there is sufficient evidence for him to be tried before a grand jury.

If a jury trial is decided upon, he will be asked to attend court to offer a plea, at which hearing the prosecutors will have another chance to ask for him to be jailed.

If convicted, he faces up to 20 years in prison and up to $5 million in fines.

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