Adjudicator Daphne Shaw Dyck says she has decided to allow their release on strict conditions.
The rules include that they continue to live at a condo in Burnaby, which they can only leave during specific times and not together.
They must also post $80,000 bonds, and report to authorities regularly while they appeal the ruling that denied them refugee status.
Lai Changxing
China accuses Lai of masterminding a huge smuggling and corruption scandal.
Earlier this week federal lawyers revealed that Lai may face criminal charges in Canada.
An RCMP affidavit presented at Lai's detention hearing on Tuesday, alleged he tried to obtain false passports since he arrived in Canada. The document says Lai is also being investigated by the RCMP Proceeds of Crime Unit over allegations of money laundering.
Lai, at the top of China's most-wanted list, is accused of masterminding a multi-billion-dollar smuggling network, and China wants the couple sent back to face charges.
He fled to Canada along with his wife and four children in 1999, and was arrested a year later. Lai denies breaking any laws back home.
For six months a Canadian refugee board considered his request to stay in the country – reviewing thousands of documents and interviewing dozens of witnesses.
Lai's lawyers argued that his life would be in danger if he were returned to China, where at least 14 people have received the death penalty for their roles in the smuggling operation.
But Beijing wants to put him on trial so badly, it has taken the unusual step of promising not to execute Lai if he is convicted.
In its 294-page decision released June 21, the refugee panel said Lai and his wife Tsang Mingna were "not credible" applicants.
"There were serious reasons for considering Lai had committed the crimes of smuggling and bribery," the board wrote. Similar concerns were raised about his wife.
If sent back to China, "there is also no more than a mere possibility that they will suffer any mistreatment that may amount to persecution," according to the panel.
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