"Mahmoud Salehi was freed on Sunday on a 400-million-rial (43,500 dollars) bail after more than a year in jail," the Kargozaran newspaper reported.

A former leader of the bakers' union in the town of Saqez, in the western Kordestan province, Salehi was jailed for one year on charges of harming national security in April 2007.

Salehi went on a total hunger strike in March amid fears that new charges that had been issued against him would prolong his detention beyond his scheduled release date, the rights watchdog Amnesty International has said.

According to Amnesty, the new charges involved communicating with individuals outside of prison to issue messages of solidarity to other activists being held in jail.

Rights groups and unions had been calling on the Islamic republic to release Salehi and the head of Tehran bus conductors' union Mansour Ossalou, who has pushed for stronger unions in Iran.

Ossalou was last year sentenced to four years in prison for acting against national security and to an additional year for disseminating propaganda against Iran's Islamic system.

Iran has stepped up its crackdown on rights activists in recent years and dozens of women's rights advocates, students and unionists have been arrested on security charges.