Hong Kong media mogul and pro-democracy activist Jimmy Lai returned to police custody on Tuesday after the city's top court ruled in favor of prosecutors' appeal of bail terms set before Christmas.

The appeal was heard last week by a five-member group of judges at the Court of Final Appeal handpicked by Hong Kong chief executive Carrie Lam to assess national security cases.

They ruled that Justice Alex Lee, the judge who gave Lai bail albeit with harsh home confinement restrictions, had "misconstrued" the provision and "misapprehended" the security law's threshold requirement.

Lai was released on a HK$10 million ($1.29 million) bond in late December after being sent to jail while awaiting trial on charges of fraud and collusion with foreign forces - both acts punishable by a life sentence under Hong Kong's National Security Law.

Lai, 73, spent nearly 60 days in jail in the fall and became the first person charged under the security law to receive bail, prompting sharp criticism from Chinese media.

According to the Court of Final Appeal judges, the default for national security law cases should be withholding bail.

The wealthy publisher of anti-establishment newspaper Apple Daily can reapply for bail at the High Court, Chief Justice Andrew Cheung said on Tuesday, but Lai's lawyers say the new application will not be ready ahead of the four-day Lunar New Year long weekend.

Outside the courthouse in Hong Kong's Central district, supporters called out words of encouragement while pro-China protesters brandished placards calling for Lai's arrest.

This all began late last year, when Lai and two senior Next Digital executives were charged with fraud on December 3 over the alleged improper use of office space at the company's Tseung Kwan O headquarters.

One week later, he was charged with colluding with foreign forces on his social media accounts which have become inactive as part of his now-revoked bail agreement.

Lai and his followers have received an outpouring of public support, both international and domestic.

American politicians tweeted in favor of the businessman-turned-activist who "[is sitting] in jail for the sin of criticizing his government," as US senator Marsha Blackburn said after his initial arrest.