Arthur Mutambara, head of a splinter faction of the Movement for Democratic Change (MDC), was told to pay Zim$20-billion and report to police each Friday at a court hearing in Harare.

Magistrate Mishrod Guvamombe said he was not allowed to move from his current home while on bail and set a new court date for June 17.

Mutambara was arrested on Sunday over an article he wrote in April for the country's only independent Sunday paper The Standard, which accused Mugabe of running down the Zimbabwean economy and his security forces of abuses.

Prosecutors said Mutambara's article was "wholly or materially false" and that it undermined public confidence in the security forces.

Speaking to reporters after the hearing, Mutambara accused Mugabe of "violating the human rights of our people".

"What has happened to me is nothing compared to what the people of Zimbabwe are experiencing," he said.

"Mugabe is violating the human rights of our people but no amount of human rights violations will succeed. We will triumph over evil."

Mutambara's lawyer Beatrice Mtetwa said she would challenge the charges, arguing that the facts did not constitute an offence.

Mutambara's MDC faction fell out with main MDC leader Morgan Tsvangirai in 2005 after a dispute over whether to contest senate elections, but the pair have joined forces in a bid to ensure a Tsvangirai win over Mugabe in the June 27 run-off.

Four MDC lawmakers have been arrested in the last month amid mounting violence.