Robel Phillipos, 19, was charged last week with lying to investigators about visiting Tsarnaev's college dorm room after the bombings. The University of Massachusetts Dartmouth student faces a maximum of eight years in prison if convicted.
Prosecutors initially asked that Phillipos be held while he awaits trial, arguing he poses a serious flight risk. But both sides said in a court motion filed Monday they agreed that Phillipos should be released on $100,000 bond, face home confinement and wear an electronic monitoring bracelet.
"We are confident that in the end we will be able to clear his name," defense attorney Derege Demissie said.
Assistant U.S .Attorney John Capin said documents filed over the weekend by Phillipos' defense, including many affidavits showing support from family and friends, might be viewed as indirectly questioning the government's case against Phillipos.
"The government stands by its allegations," Capin said.
Defense attorney Susan Church described Phillipos as a well-liked, honor roll student with many friends and supporters. At least 50 relatives, friends and other supporters attended the court hearing.
Church emphasized that Phillipos is not accused of helping Tsarnaev and his brother plan or carry out the bombings.
"At no time did Robel have any prior knowledge of this marathon bombing," she said.
Magistrate Judge Marianne Bowler agreed to the strict house arrest during the hearing Monday afternoon. She told Phillipos he was allowed to leave the house only for meetings with his lawyers or true emergencies.
It was not immediately clear when Phillipos would be released.
Meanwhile, a funeral director trying to find a cemetery to take the body of Tsarnaev's older brother and alleged accomplice, Tamerlan, pledged to ask the city of Cambridge to allow him to be buried in a city-owned cemetery because the brothers lived in Cambridge for the last decade.
But Cambridge City Manager Robert Healy said he is urging Tsarnaev's family not to make the request.
"The difficult and stressful efforts of the citizens of the City of Cambridge to return to a peaceful life would be adversely impacted by the turmoil, protests, and wide spread media presence at such an interment," Healy said in a statement Sunday.
Worcester funeral director Peter Stefan said hasn't been able to find a cemetery in Massachusetts willing to accept the remains of Tamerlan, who was killed following a gunbattle with police four days after the bombings. He said if Cambridge turns him down, he will seek help from state officials. Stefan said Monday he is looking outside of Massachusetts and does not think Russia will take the body.
If Russia refuses the family's request to accept the body, Cambridge may be forced to take it, said Wake Forest University professor Tanya Marsh, an expert in U.S. law on the disposal of human remains.
Massachusetts law requires every community to provide a suitable place to bury its residents, she said. Cambridge's appeal to the family not to ask it to bury the body is likely a way to set up its defense if the family goes to court to try to force the burial, Marsh said.
Such a case would be unprecedented in Massachusetts, she said. She added that even in a country that's had its share of notorious accused killers, this kind of opposition to a burial is unheard of and is exposing holes in the law, Marsh said.
"It's a mess," she said. "We're really sort of in uncharted territory."
Gov. Deval Patrick said Monday the question of what to do with the body is a "family issue" that should not be decided by the state or federal government. He said family members had "options" and he hoped they would make a decision soon.
He declined to say whether he thought it would be appropriate for the body to be buried in Massachusetts.
"We showed the world in the immediate aftermath of the attacks what a civilization looks like, and I'm proud of what we showed, and I think we continue to do that by stepping back and let the family make their decisions," the governor told reporters.
Phillipos is accused of lying to investigators about visiting Dzhokhar Tsarnaev's college dorm room on April 18, three days after the bombings. Two other friends were charged with conspiring to obstruct justice by taking a backpack with fireworks and a laptop from Tsarnaev's dorm room. All four had studied at UMass Dartmouth.
Phillipos' attorneys said in court documents their client had nothing to do with the deadly bombings and isn't a flight risk.
In letters filed with the motion, friends and family members urged the court to release Phillipos on bail, describing him as peaceful and non-violent.
"I was shocked and stunned when I heard the news of his arrest. I could not control my tears," wrote Zewditu Alemu, his aunt. "I do not believe that my beloved Robel crosses the line intentionally to support or assist such a horrendous act against us the people of the USA. By nature he does not like violence. He loves peaceful environment."
Phillipos' resume, filed in court, shows he was majoring in marketing with a minor in sociology at UMass Dartmouth and expected to graduate in 2015.
The Tsarnaev brothers are accused of carrying out the bombings using pressure cookers packed with explosives, nails, ball bearings and metal shards. The attack killed three people and injured more than 260 others near the marathon's finish line.
Dzhokhar Tsarnaev was captured and remains in a prison hospital. He has been charged with using a weapon of mass destruction and faces a potential death sentence if convicted.
Tamerlan Tsarnaev's uncle, Ruslan Tsarni, of Montgomery Village, Md., and three of his friends met with Stefan on Sunday to wash and shroud Tsarnaev's body according to Muslim tradition.
Tsarni told reporters that he is arranging for Tsarnaev's burial because religion and tradition call for his nephew to be buried. He would like him buried in Massachusetts because he's lived in the state for the last decade, he said.
"I'm dealing with logistics. A dead person must be buried," he said.
The state medical examiner ruled that Tsarnaev died from gunshot wounds and blunt trauma to his head and torso, and authorities have said his brother ran him over in a chaotic getaway attempt.
Tsarni has denounced the acts his nephews are accused of committing and said they brought shame to the family and the entire Chechen ethnicity. The brothers are ethnic Chechens from Russia who came to the United States about a decade ago with their parents. Both parents returned to Dagestan last year.
Tsarni said he hopes to eventually see Dzhokhar Tsarnaev at his prison hospital.
"This is another person left all to himself," he said.
Associated Press writers Bob Salsberg and Jay Lindsay contributed to this report.
Copyright 2013 The Associated Press.