It is unusual, given the gravity of the accusations, for a court to agree to house arrest and the decision was seen by supporters as a sign that authorities were nervous about the outcry.
The journalist's arrest last Thursday shocked many in Russian Federation, especially as he was accused of being involved in a drug ring.
In an apparent attempt to portray Golunov as a professional drug dealer, police on Friday released several photos, reportedly from the journalist's home, of what appeared to be a drugs lab.
Valentina Matviyenko, who presides over the upper house of the Russian parliament, said that the nation's chief prosecutor had assured her that he will "personally" oversee the investigation into arrested journalist Ivan Golunov.
Interior Minister Vladimir Kolokoltsev said in a statement that the criminal case against Golunov was being dropped due to a lack of evidence of any wrongdoing on his part.
Galina Timchenko, general director of online news portal Meduza where Golunov works, told the Interfax news agency: "I am happy, I'm crying".
The Kremlin said on Monday that the way Mr. Golunov's case had been handled raised many questions. The images were swiftly deleted from the interior ministry's website after a police spokesman admitted they had been taken at a different location and bore no relation to the charges against the journalist. According to the police, Golunov was stopped and searched while walking along the central Tsvetnoy Boulevard on Thursday afternoon and found carrying four grams of mephedrone on his rucksack. For now, they have been suspended from duty. Another journalist in Moscow, Alexey Kovalev, asked via Twitter, "Cops who framed him will be investigated".
"I have chose to ask the Russian president to dismiss Head of the Interior Ministry's branch in the Western Administrative District of Moscow Police Major General Andrei Puchkov and Head of the Drug Control Department of the Interior Ministry's Moscow branch Police Major General Yuri Devyatkin", Kolokoltsev added.
The climb-down prompted joy from Golunov's supporters. Another rally, planned for June 16, has been approved by the authorities.
Later that day, Golunov was detained in public and taken back to his apartment, where he was confronted with drug paraphernalia.
The fact that his reporting did not focus on Kremlin officials or President Vladimir Putin's inner circle has led many to believe that the case against the journalist was not something conceived in the seat of Russian power but came either from lower-level officials or from criminals.
His case set off alarm bells in Moscow's journalism circles, Bershidsky writes, including the fear that "anyone could be next in line".
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