Raymond Davis, the CIA spy charged with twin murder in Lahore, has been freed after the families of two dead men agreed to drop charges in exchange for financial compensation. The law minister of Punjab, Rana Sanaullah, made the announcement hours after Davis appeared at a makeshift court in the jail where he was being held. Davis was freed under the Islamic "blood money" provision of Pakistani law, whereby an accused murderer can be freed on payment of financial compensation to the family of the victim. Davis claimed he was acting in self-defence against robbers but Pakistani prosecutors said the evidence suggested he intended to kill the two men, and charged him with murder. The case has become a major block to already fragile relations between Pakistan and the US, with officials from President Barack Obama down insisting that Davis was a bona fide diplomat who deserved diplomatic immunity.