The court ruled they could hold a rally in a stadium, after police had said street protests could turn violent.

Police released Zimbabwe's main opposition leader, Morgan Tsvangirai, hours after taking him away in the middle of the night for questioning about the planned demonstration, his lawyer said.

His Movement for Democratic Change (MDC) launched a legal challenge on Tuesday to the police ban.

"The net effect of the judgement is that the police were right in banning our march in the CBD (Central Business District). However our rally is being allowed," said MDC secretary-general Tendai Biti.

"We are allowed to walk to the venue so we are going to walk to the venue quietly and peacefully," said Biti, adding the MDC would appeal against some aspects of the ban.

The rally is expected to start at 1230 GMT."

Mugabe has been in power since independence from Britain in 1980 and critics say he has used tough security laws to keep his opponents in check. Mugabe denies the charge.

About two dozens police in a truck have deployed in front of MDC headquarters and were keeping an eye on the building, said a Reuters witness.

Tsvangirai was picked up at 4 a.m. (0200 GMT) from his home in a suburb of the capital Harare by plain-clothes officers. He was released about four hours later, Biti said earlier.

Muchadehama said police also picked up another MDC leader, Dennis Murira, who was also released later.

Tsvangirai was last arrested in March 2007 along with dozens of opposition officials ahead of another planned march. He says police beat him up in custody but they deny this.

The police had initially granted permission for Wednesday's march, which the MDC also called to protest against a crumbling economy blamed on government mismanagement as well as to press for a new constitution.

Zimbabweans have tended to shy away from demonstrations in recent years, mainly from fear of a heavy-handed response by security forces and were on Wednesday busy queuing for cash at banks while many went about their normal business.