Iran is ready to free the U.S. hiker Sarah Shourd on bail of $500,000, Tehran prosecutor Abbas Jafari-Dolatabadi said, after authorities delayed her release scheduled for yesterday, citing incomplete legal procedures.

“Sarah Shourd, the U.S. spy, can be released on bail of $500,000,” Jafari-Dolatabadi was quoted as saying today by the state-run Fars news agency.

White House Advisor David Axelrod said the administration was “hopeful” and “encouraged” by the reports, but told NBC’s “Meet the Press” that he wouldn’t comment specifically because “we’re at a sensitive stage here.”

Shourd, 32, was arrested in July 31, 2009, along with two other U.S. citizens, Shane Bauer and Josh Fattal, for illegally crossing into Iran from Iraqi Kurdistan. Iranian state-run news agencies had reported last week she would be released yesterday in an act of clemency.

Shourd’s lawyer Massoud Shafei said he’d relayed the terms of the release to her family and to the Swiss embassy in Tehran, which represents U.S. interests in the country.

There is “a possibility that she may be released later today,” Shafiei said, according to the state-run Iranian Students News Agency.

Prosecutor Jafari-Dolatabadi today criticized the government announcement regarding the imminent release, saying it had been made while the judiciary was still working on the case, the state-run Mehr news agency reported.

‘Espionage’

“There are enough reasons” for the three Americans to be accused of espionage, Jafari-Dolatabadi said in a separate report on the official Islamic Republic News Agency. “Their case is almost complete and the judge has issued an indictment,” he said, adding that the two men are to be taken into custody while the judge decided Shourd could be freed “based on her illness.”

Shourd suffers from depression, has a precancerous condition and told her mother that she had discovered a lump in her breast, according to an Aug. 5 report on freethehikers.org, a campaign website set up to help gain the three Americans’ release.

Shourd’s mother had asked the United Nations’ Special Rapporteur on Torture last month to step in to help end her daughter’s solitary confinement, according to the website.

Iranian local media announced Sept. 9 that Shourd would be released two days later after Iranian officials, including President Mahmoud Ahmadinejad, “closely studied the case.”

The gesture to free Shourd marked the end of the Muslim fasting month of Ramadan, and symbolizes Islamic compassion and Iran’s “special regard for women,” Foreign Ministry spokesman Ramin Mehmanparast said of the original release plan.

U.K. Sailors

Iran sparked a crisis in 2007 when it held 15 U.K. sailors and marines for two weeks for allegedly trespassing into Iranian waters. Two years earlier, Iran jailed a Frenchman and a German citizen who strayed into Iranian waters during a fishing trip. They were released from an 18-month prison term in 2007 after being granted clemency by Iran’s highest authority, Supreme Leader Ayatollah Ali Khamenei.

Shourd lived with Bauer in the Syrian capital, Damascus, where she taught English, according to freethehikers.org. Bauer, 28, is a freelance journalist and photographer who has traveled in the Middle East and northern Africa over the past seven years. Their friend Fattal, also 28, is an environmentalist who was visiting Damascus before they headed to Iraq, according to the website.

Iran and the U.S. have had no diplomatic ties since the 1979 Islamic revolution which replaced Iran’s monarchy with the Islamic Republic.

To contact the reporter on this story: Ladane Nasseri in Beirut at ten.grebmoolbnull@iressanl.

Bloomberg