Judge Ronald Ellis agreed to stay his order for 48 hours until 1300 hours (2330 hours) Wednesday.

Rejecting the prosecutor's plea for sending him to jail, Ellis said the government has failed to prove that 70-year old Madoff, who is allegedly involved in $50 billion investment fraud, is a flight risk.

The ruling angered the investors who had lost heavily in the Ponzi scheme run by him, some of whom angrily said that while they have lost their lifetime savings, Madoff would be allowed to stay in his $7 million penthouse surrounded by all luxuries.

But legal analysts said that it would be difficult for the prosecutors to prove that he is a flight risk especially as he is wearing an electronic monitoring bracelet and watched by security guards paid for by his wife round the clock though he could get up to 20 years if convicted.

If Ellis' ruling is upheld, then Madoff will remain in his penthouse until the end of his trial. He is accused of running a Ponzi scheme under which older investors are paid by the money received from newer ones. The investors were attracted by high interest rate he offered for their investments.

Madoff is currently on a $10 million bail secured by the houses owned by his wife. The prosecutors sought revocation of his bail after he allegedly mailed expensive watches and jewellery, which they estimated, were worth about $1 million from assets frozen by the court.

His lawyers argued that he was not aware that his action violated the court's orders. Taking into account prosecutors' fear that he might do more financial harm to the investors, the judge placed additional restrictions including searches of his mail and ordering him to provide list of all his moveable assets.

A security firm is expected to take inventory of the assets every two weeks. But legal analysts said it could take quite sometime to compile the list.

As per the court ruling, Monday was the deadline for the prosecution to indict Madoff and submit to a preliminary hearing to explain to a judge why formal indictment has not been issued. But on Friday last week, the defense lawyers agreed to a 30-day extension which postpones the date to mid February.

The packages Madoff sent contained 13 watches, 4 diamond brooches, a jade necklace, 2 sets of cufflinks and other jewelry, the prosecutors said. Most of the items sent were recovered.

They also charged that he planned to transfer $200 million to $300 million of investors' money to family members and friends. Madoff's lawyers said the items being sent had sentimental value and it was an honest mistake.