An Islamic State “bride” accused of indoctrinating her children into violent jihad has been freed on bail by a Victorian court and told not to contact a convicted terrorist who plotted attacks in Melbourne.

Magistrate Brett Sonnet handed down the decision to allow Rayann El Houli to walk from custody under an extraordinarily restrictive set of conditions, including a ban on her communicating with Islamist terror leader Nacer Benbrika or his son.

Benbrika, also known as Abu Bakr, was jailed for 18 years in 2009 for heading a local extremist cell that plotted to blow up the Melbourne Cricket Ground during the 2005 AFL Grand Final.

The extent of any relationship between Ms El Houli and the Benbrika family was not aired in court but police had previously said they would seek to ban her from making any contact with “two individuals” of concern, being Benbrika and his son, Ibrahim, who is currently before the courts on assault and robbery offences.

The decision to bail Ms El Houli follows details aired in the Melbourne Magistrates Court last week, when it heard she had quizzed her children over killing “infidels”.

Snapshots of footage tendered in court also show her children being forced to watch propaganda videos of Islamic State fighters. Ms El Houli, in her early 20s at the time, faces charges of being a member of a terrorist organisation and entering a declared conflict zone.

She appeared in court via audio­visual link from the Dame Phyllis Frost Centre wearing a purple hijab. To secure her release, a family member lodged a $50,000 financial guarantee.

She is prohibited from leaving Victoria, must surrender all travel documents, and cannot go within 100m of any place of worship except for a pre-approved mosque, nor can she contact prosecution witnesses.

She is also barred from accessing any extremist propaganda and cannot take up employment without providing police with notice of her specific duties and workplace.

Monday’s decision marks the second successful bail application by an “ISIS bride” following the release of Kawsar Abbas, who is facing crimes against humanity offences.

Both women were represented by lawyer Peter Morrissey, who argued that their release would not pose a risk to the ­community.

During his ruling after a week of deliberations, Mr Sonnet determined that while the case against Ms El Houli was strong, a combination of “exceptional circumstances”, such as likely delays, justified her release on bail.

“In my view the application for bail must be granted,” he said.

Mr Sonnet accepted defence submissions that the time she would spend on remand awaiting trial could exceed any period of imprisonment she might serve if convicted.

The prosecution strongly opposed bail, pointing to the disturbing video evidence viewed by the magistrate in chambers, which they argued demonstrated an adherence to radical ideology.

The prosecution contended she posed an unacceptable risk to the safety of the community.

Mr Morrissey said his client’s focus had completely shifted towards her duties as a mother since returning to Australia.

Mr Sonnet accepted the risk to the community was “relatively low” because of her social isolation from radical elements since arriving back in Australia.

Prosecutors allege the Melbourne-raised woman, now 34, travelled to Syria in 2014, then aged 21 or 22, with her husband, Allak Hamad, to join Islamic State.

It was then argued that she could have been coerced into filming her young children being indoctrinated into violent jihad.

Mr Sonnet told the court that while the videos were disturbing, he accepted the evidence of clinical psychologist Katie Seidler, who said she had assessed Ms El Houli as a low risk after using a clinical assessment tool.

He also noted she had several protective factors, including her four children, supportive family, co-operation with police and ongoing health and psychological care.

In a recording from May 2015, Ms El Houli allegedly filmed herself questioning her firstborn about Islamic State militants.

Court transcripts show she questioned the toddler about who the “mujahidin” were and what happens to “disbelievers”. When there was no response, Ms El Houli urged the child to state: “In the hellfire.”

In another video in March 2016, Ms El Houli’s children – then aged 2 years and 9 months, and 1 year and 9 months – were pictured watching ISIS videos.

During the screening, Ms El Houli’s youngest child was allegedly filmed raising her index finger, before the accused asked: “What does the Mujahid do to the infidel?” Days later, she allegedly filmed her eldest child playing with a toy rifle. In the recording, she coached the toddler on how to hold the weapon like a “fighter” and asked: “Did you see how the Mujahideen kill the Kuffar (infidels) with the knife? Look at me. How did they slaughter them with the knife?

“Look at me, how do they slaughter the apostate? Show me how.”

Ms El Houli left the Dame Phyllis Frost Centre on Monday night with members of her family. She will reside at an address with her mother, in Melbourne’s western suburbs.

The family of the last remaining imprisoned woman in Melbourne who married an ISIS fighter, Zeinab Ahmad, were also at the Dame Phyllis centre in Ravenhall on Monday night. Ms Ahmad remains behind bars after her bail application was denied.