Hazare confidante Kiran Bedi -- a decorated former police officer who too was detained but released within hours -- said the Gandhian was determined to pursue his fast at the JP Park in the heart of the capital -- minus the prohibitory orders imposed by police.
She said he would not leave Tihar Jail until this condition was met.
The day-long drama effectively left the government floundering, with Congress leaders struggling to defend their earlier hardline stand against a Gandhian who has become an icon in India's war on corruption.
In the evening, Congress general secretary Rahul Gandhi called on Prime Minister Manmohan Singh who earlier convened a meeting of senior ministers to discuss the tense situation -- and the likely political fallout.
"We can apologize" for arresting Hazare, Congress spokesperson Renuka Chaudhry said late in the evening, as protests in support of the man raged in numerous places, principally in New Delhi and Mumbai where thousands poured out of their homes holding Indian flags, cloth banners and posters.
As night broke, crowds in the capital only swelled, mainly outside Tihar Jail and the Chhatrasal sports stadium in another corner of the city where hundreds had been detained for siding with Hazare.
Tihar Jail spokesman Sunil Gupta said shortly before 9pm that Hazare had been let off from his cell but he was in the prison office, talking to officials and refusing to leave.
Eminent jurist Soli Sorabjee said the government had tripped badly.
"What is happening in the government?" Sorabjee asked on TimesNow television.
"This is a gigantic folly, a gigantic miscalculation" by the government.
The widely condemned arrests of Hazare and his key associates crippled parliament as an otherwise divided opposition closed ranks.
The Bharatiya Janata Party and the Communist Party of India-Marxist called for protests across India Wednesday.
"The reaction is tremendous all over India," said former Supreme Court judge Santosh Hegde in Bangalore, one of scores of cities that saw numerous small and big demonstrations in support of Hazare.
"People are pouring out their anger."
It all began shortly after 7am when policemen in civilian clothes swooped on Hazare and trusted activist Arvind Kejriwal as they stepped out of a middle class apartment in east Delhi.
They were to begin their hunger strike, in violation of police orders, for a strong lokpal bill in place of the government-sponsored one that excludes the prime minister, the judiciary and a mass of junior government officials from its purview.
As hundreds blocked a main road, the police were stuck with Hazare and Kejriwal.
Eventually he was taken to the police officers' mess in another part of the city, then to another office and finally sent to prison when he refused to sign a bail bond.
Before being detained, Hazare -- aware that he could be arrested -- said in a recorded video message: "Don't let my arrest stop this movement. This is the nation's second struggle for freedom."
The message had an electrifying effect.
In towns and cities across India, spontaneous protests erupted. Tens of thousands took to the streets shouting slogans against the government and hailing the Gandhian.
The biggest shows of solidarity were reported from New Delhi and Mumbai.
Apart from major cities such as Bangalore, Chennai, Kolkata, Hyderabad, Chandigarh, Lucknow and Ahmedabad, numerous big and small protests took place in Udaipur, Jammu, Selam, Bhopal, Surat, Rajkot, Patna, Guwahati, Raipur, Shimla, Mandi, Amritsar, Ludhiana, Bhiwani -- and many more.
The people who took to the streets were dominantly from the middle class -- sick and tired of India's endemic corruption. There were men and women, from vocal teenagers to spirited men even in their 80s.
There was no case of violence anywhere in the country.
Once Hazare was taken to Tihar Jail, large numbers offered themselves for arrest here. The number swelled to around 1,400, by official admission. After a while police refused to arrest any more saying that the makeshift prison -- Chhatrasal stadium -- was overflowing.
Activists insisted that up to 5,000 had been detained.
Senior ministers justified the arrest but sounded defensive.
Human resource development minister Kapil Sibal even suggested that Hazare could again talk to the government over the proposed lokpal bill.
Ministers denied that Delhi Police acted under political pressure.
Celebrities too stepped in to verbalise their distress.
Lyricist Javed Akhtar said: "I have had certain reservations about Anna's method but his arrest cannot be condoned. It is undemocratic, unacceptable."
