Today, Suu Kyi will begin a new campaign for democracy

The nation's opposition leader is freed, and will rally her supporters when she meets them at noon at her party's headquarters

The barrier breached, they surged forward, past the sign saying "Restricted Area", speeding to a trot, the joy of the moment manifested in little leaps, air punches and laughter. Two hundred yards down University Avenue, on the right, was her house, a tatty fence, grey metal gate, the red sign of her National League for Democracy (NLD) party, a portrait of her heroic father, General Aung San.

They thronged around her gate, hundreds of them, holding aloft their portraits of their leader, some with little playing card-sized pictures they may have kept hidden in their pockets for years. "Long Live Aung San Suu Kyi!" they chanted. Then suddenly there she was. The crowd leapt to its feet as if a cup-winning goal had been scored. "May Suu, May Suu!" "Mother Suu!" they roared, affection overwhelming their usual reverence.

Rangoon was a place where history was made yesterday afternoon when the Burmese democracy leader Aung San Suu Kyi was released after seven years of detention in her own home. After a further morning of speculation as to whether she would actually be set free, police suddenly removed the barriers on the street outside her home and, moments later, she was standing at her fence, wearing a lilac jacket and beaming excitedly at the crowds in front of her.

She was delicate and calm, her head and shoulders above the metal spikes of the gate, presumably standing on a ladder behind it. Her hand briefly reached up to touch her swept-up hair, checking it was in place. She smiled and nodded, made a victory sign with her right hand.

Minutes passed, the crowd was torn between yelling her name and wanting to hear her voice. Her fingers on lips, then there was quiet. "There is a time for silence and a time for talking," she told the cheering supporters gathered at the gates of her lakeside compound, for so long a place that was off-limits to ordinary citizens. "We should work together, united. Only then can we achieve our goal."

There were then more cries followed by further appeals for quiet.

"Tomorrow at 12 o'clock I will meet you at Shwegondine," she said referring to the small headquarters of the National League for Democracy. "Can you let everyone know?" There was laughter and delight at the joke, and she laughed too.

"Very happy, very happy!" said two men in the crowd, which had earlier created a passage to allow three cinnamon-robed monks to reach the front so that the democracy leader could pay obeisance to them when she appeared. One of those at the front of the crowd was the British ambassador Andrew Heyn, elated along with everyone else. Many had their hands in the air, holding up mobile phones to click a photograph of their heroine. "This is a great day, long overdue," yelled Britain's representative.

Across Burma and around the world, the reaction to her release after so many years of isolation was both rapid and euphoric. President Barack Obama said the Nobel laureate was his hero and that the US welcomed "her long overdue release". David Cameron said Ms Suu Kyi was "an inspiration for all of us who believe in freedom of speech, democracy and human rights". It was reported that the opposition leader had spoken by phone to at least one of her two sons, one of many things that has been denied to her these past seven years.

But campaigners also warned that while her release was hugely welcomed, it did not necessarily mark a point of change for Burma. More than 2,200 other political prisoners remain behind bars; recently held parliamentary elections were rigged and skewed in favour of the military's proxy, the Union Solidarity and Democracy Party. It is even possible Ms Suu Kyi could be arrested again, as she was on three other occasions after being released by the junta. On her last release in 2002, she herself declared: "My release should not be looked at as a major breakthrough for democracy. For all people in Burma to enjoy basic freedom, that would be a major breakthrough."

Campaigners say the junta has shown no interest in recent years in entering into dialogue with her or her party. Indeed, when she was due for release last year, the authorities seized on the now infamous incident in which an uninvited American swam to her house and she was accused of breaching the terms of her detention. Sentenced to a further 18 months in jail, she was neatly prevented from playing any part in the recent election, which her party boycotted. "It's the proverbial one step forward on a 1,000-mile journey," said her international lawyer, Jared Genser, head of the Freedom Now organisation.

Precisely what conditions the authorities seek to place upon Ms Suu Kyi may emerge in the coming days. Previously, she has been prohibited from leaving Rangoon, or forced to register with the army whenever she intends to go out of the city. But she has always defied such restrictions, and in the days and weeks before her term of detention officially expired last night at 7pm local time, she had made clear she would accept none.

In 2000, she spent six days in her car at a military roadblock after being stopped from leaving Rangoon, the standoff ending only when she was put back under house arrest. After her release in 2002, Ms Suu Kyi and her party travelled the country. In May 2003, her convoy was attacked by a government mob and more than 70 of her supporters were killed. The authorities then detained her again, "for her own protection".

If – as is anticipated – she goes ahead with her plan to speak today at the party offices, the streets of Rangoon will be filled with thousands of supporters and ordinary citizens, turning out to see in flesh the women they refer to simply as The Lady. What she says to those crowds could be hugely significant in terms of indicating what future role she sees for herself and her officially disbanded party in the country's ongoing struggle for democracy. Her every word will be seized on and analysed, not just by her supporters but by the junta, headed by General Than Shwe, anxious about her influence and power.

Some sources last night predicted she would not make any major announcements, preferring instead to take the opportunity to be fully briefed by her party before doing so. It is likely, however, she could return to her favoured theme of unity.

For all the excitement in Burma, many remain deeply concerned about the future. "We feel powerless now, more than ever," said Ma Thida, 32, a health worker in Rangoon. "The government is releasing her because they think they have won the election and can control her and the country completely. How can she do anything?"

Some worry, too, that Ms Suu Kyi, 65, will be out of touch with the mood and problems of her country after her long years in detention, cut off from the world. Certainly, the Rangoon Ms Suu Kyi will find is very different from the city she last saw more than seven years ago.

The colonial city is no longer the seat of government. In 2005, following the advice of his astrologer, Burma's famously superstitious senior general Than Shwe abruptly abandoned Rangoon and moved the capital to a newly built complex in the country's arid central plains. The old ministries are now abandoned shells, left to crumble with much of the rest of the decaying city centre. Ringing the city are the impoverished suburbs, home to hundreds of thousands of jobless rural immigrants, living in bamboo shacks without electricity or running water.

But in her own, affluent district of Kamayut she will also see new internet cafés, fashionable bars and coffee shops, delis and gem shops to service the wealthy elite. In the streets near University Avenue, on the banks of Inya Lake, she will notice dozens of new and gaudy neo-classical mansions, the homes of Burma's cronies. They stand in sharp contrast to her own mouldering villa, which she has barely been able to afford to maintain during her years in captivity.

One thing she may not recognise is the strange yellow, green and red flag fluttering on the police post on the corner of her street; without consultation or warning, the military introduced a new national flag last month.

As darkness fell last night on Rangoon, the city was charged with energy. Ms Suu Kyi was back inside her home. She had spent some of the evening with her closest colleagues, among them her lawyer Nyan Win, party veteran U Win Tin and U Win Htein, a former political prisoner who spent 14 years in jail.

Last night, after returned from the meeting, U Win Htein told The Independent on Sunday: "She was delighted to have been released and she was grateful for the crowds that greeted her. She said she was very eager to continue her work."

They were her colleagues, but last night they were also her guests. The house on University Avenue, the place that for so long has been her prison, was one again just her home.

Political prisoners: 'We must not forget the 2,202 still held'

Campaigners last night called on the Burmese authorities to set free more than 2,200 other political prisoners who remain in the country's jails.

Unlike Aung San Suu Kyi's release in 2002, her freedom has not come as part of a broader initiative for dialogue with the authorities. Indeed, some believe the release of the 65-year-old was nothing less than a publicity stunt to distract attention from a fraudulent recent election and the prisoners still behind bars. "The release of Aung San Suu Kyi is about public relations, not democratic reform," said Zoya Phan of the Burma Campaign UK, which issued a report entitled "1 Down, 2,202 To Go". "We must not forget the thousands of other political prisoners still suffering in Burma's jails."

Many of those were arrested after the September 2007 uprising when tens of thousands of ordinary people and Buddhist monks took to the streets in demonstrations that started as protests against price rises and spread to include demands for democracy. Among those detained are U Gambira, a 30-year-old monk and a leader of the protests, who is serving a 63-year sentence; Min Ko Naing, a former student leader serving a 65-year term; and Nay Phone Latt, a 30-year-old blogger serving a 12-year sentence, who used the internet to spread news of the protests.

Amnesty International said last night of the remaining prisoners: "They are held in grim conditions, with inadequate food and sanitation. Many are in poor health and do not receive proper medical treatment. Many were tortured during their initial interrogation, and still risk torture as a punishment at the hands of prison officers."

Andrew Buncombe

Inspired by a 'symbol of moral courage'

'Suu Kyi has been silenced, incarcerated and deprived of any opportunity to engage in political processes'

Barack Obama, US President

'Aung San Suu Kyi is an inspiration for all of us who believe in freedom of speech, democracy and human rights'

David Cameron, Prime Minister

'There will be joy round the world at the release of Aung San Suu Kyi, the world's most renowned and courageous prisoner of conscience'

Gordon Brown, former Prime Minister

'She is a symbol of moral courage. We wish her strength and health as she makes her transition from such a long period under house arrest'

Desmond Tutu, former Archbishop of Cape Town

'Her release only marks the end of an unfair sentence that was illegally extended, and is by no means a concession on the part of the authorities'

Salil Shetty, Amnesty, Secretary General

'At best it's the proverbial one step forward on a 1,000-mile journey'

Jared Genser, lawyer representing Suu Kyi