Pakistan plans to appeal a court decision to grant bail to a man accused of masterminding 2008 attacks in India's financial capital that killed 166 people, prosecutors said on Friday.

The decision to grant bail to Zaki-ur-Rehman Lakhvi appeared to blind side the Pakistani government, drew quick condemnation from India and is likely to hinder attempts to patch up ties between the nuclear-armed neighbors.

"We are going to challenge the bail order of Lakhvi," said government prosecutor Chaudhry Azhar. "We will go to Islamabad High Court on Monday to file the application."