Cairns man Alan Leahy, who is accused of a double murder in far north Queensland two decades ago, is to be released on bail.

Leahy is accused of killing his wife Julie-Anne Leahy and her best friend Vicky Arnold at Atherton in 1991.

In a bail hearing this morning, Leahy's lawyer told the court the case was highly circumstantial.

Justice Jim Henry has indicated he will release Leahy on bail and is in the process of setting out conditions.