NEW DELHI (REUTERS) - Devyani Khobgragade, the Indian diplomat at the centre of a row with the United States, has been transferred to New Delhi from New York, the Indian foreign ministry announced on Friday.

Khobgragade has reiterated her innocence on charges filed against her of visa fraud and underpaying her nanny, a ministry statement said.

She was flying back to India to take up duties at the Ministry of External Affairs in New Delhi, but for now, her children remained in the United States, it said.

Her lawyer Daniel Arshack said she would leave with her head "held high".

"She knows she has done no wrong and she looks forward to assuring that the truth is known," he said in a statement.

The planned departure came the same day a grand jury in New York indicted her for visa fraud and making false statements.

She had been engaged in plea talks prior to the indictment, prosecutors said in a Jan 6 court filing.

While both New Delhi and Washington stressed the importance of their bilateral relationship during the crisis, it took weeks of complex wrangling to find a workable solution both sides could live with.

Documents and statements from US officials reveal a dizzying 24 hours in which the State Department granted Khobragade diplomatic immunity, unsuccessfully asked India to waive that immunity and ordered her to leave the country immediately.

According to documents provided by Mr Arshack, the US mission sent a letter to Khobragade on Wednesday granting her diplomatic status that day.

On Thursday, the Indian mission to the United Nations rejected the State Department's request that her immunity be waived. Then in a diplomatic note, the US mission requested Khobragade's immediate departure from the US and said it would take steps to prevent her from obtaining a visa in the future.

It also said Khobragade, 39, who is married to an American, risked arrest if she tried to return.

"Upon her departure a warrant may be issued for her arrest and should she seek to enter the United States she could be arrested," the note said.

India was incensed by the treatment of Khobragade and curtailed privileges offered to US diplomats in New Delhi. On Wednesday it ordered the US Embassy to close a club for expatriate Americans there.

Also on Wednesday, US Energy Secretary Ernest Moniz postponed a visit to India scheduled for next week. This move came days after US Assistant Secretary of State for South Asia Nisha Desai Biswal delayed her first visit to the country to avoid the trip becoming embroiled in the dispute.

The arresting authority, the US Marshals Service, characterised the strip search as a routine procedure imposed on any new arrestee.

As well as this treatment of Khobragade, India was angered that the US took it upon itself to fly the nanny's family out of India. The prosecuting attorney, Preet Bharara ofManhattan, an ethnic Indian, said attempts were made in India to "silence" Ms Richard and compel her to return home.

While much of the focus has been on Khobragade, the cause of the nanny, Sangeeta Richard, has been taken up by a non-government organisation called Safe Horizon, which campaigns for victims of abuse.

It said that although Ms Richard's legal presence in the US was tied to her employment, she had been granted temporary permission to remain while she cooperates with law enforcement as a victim of human trafficking.

It said Ms Richard was likely to apply for a special "T-1" visa reserved for trafficking victims. Such a visa would be valid for up to four years and allow her to work in the US. It can also lead to lawful permanent residence, according to the website of US Immigration and Customs Enforcement.

Khobragade's departure would remove the focus of current friction between New Delhi and Washington, but it is unclear how long it will take the anger to subside in the run-up to national elections in India in May. Also, the continued presence of Ms Richard in the US could prove an irritant.

The case has exposed underlying problems in a bilateral relationship that has failed to live up to its billing by President Barack Obama in 2010 as "a defining partnership for the 21st Century."

Critics accuse Mr Obama of failing to pay sufficient attention to ties with a country viewed as a key strategic counterbalance to China and as an engine to boost the US economy, while American hopes of building a more robust business relationship with India have run into bureaucratic hurdles.

Frustration has grown among the US corporate lobby. Indian sourcing rules for retail, information technology, medicine and clean energy products are contentious and US firms complain about "unfair" imports from India of everything from shrimp to steel pipes. In June, more than 170 US lawmakers signed a letter to Mr Obama about Indian policies they said threatened US jobs.

Mr Daniel Markey, senior fellow for India, Pakistan and South Asia at the Council on Foreign Relations, said the Khobragade case made it appear the Obama administration had taken its eye off the ball on the relationship with India.

"The question is why this wasn't managed in a more sophisticated or subtle way, because things can be managed more effectively. This was always going to be an issue, but it could have been resolved more rapidly with less fanfare."