In a major loss of face for the Australian government, federal court judge Jeff Spender in a decision in Brisbane ordered restoration of Haneef's visa, allowing the Bangalore doctor to return to Australia, work as a doctor and resume his studies -- unless the authorities contemplate further action.

Haneef, 27, who worked as a junior doctor at the Gold Coast Hospital, was charged with "recklessly" providing support to a terrorist organisation on July 14, following 12 days in detention under anti-terror laws.

A Brisbane magistrate granted him bail on July 16. But his detention continued as Australian Immigration Minister Kevin Andrews Andrews cancelled his work visa saying he had a reasonable suspicion that Haneef had "associated" with terrorists, specifically his second cousins Kafeel and Sabeel Ahmed, both allegedly involved in failed car bomb plot in the UK in June.

Andrews, who received considerable flak for his decision from lawyers' group and rights bodies, said earlier on Tuesday that he expected more court challenges over Haneef's visa.

"I don't think today will be the end of the matter, I think whatever the result in the court, it will probably end up on appeal and who knows even in the high court one day," he said, according to an ABC report. There is likely to be a challenge, regardless of today's ruling, he said.

Haneef's lawyers had appealed against the decision and at a hearing in the Federal Court at Brisbane on August 8, they disputed the minister's use of the word "association" and questioned whether any relationship with an alleged criminal, even an innocent one, would be enough to justify a visa cancellation.

Solicitor General David Bennett QC, told the court "association" in the minister's usage, was more like "mates" to the average Australian. He said not only had Haneef given his mobile phone SIM card to Sabeel when he left the UK last year, but he had borrowed money from Kafeel and stayed with the brothers for a short time.

The terror charge against Haneef was dropped after Commonwealth Director of Public Prosecutions Damian Bugg found there was no reasonable prospect of a conviction against the Indian doctor.

Haneef returned to India on July 29, having spent 25 days in detention, but has stated he wants to return to Australia to continue his physician training. The Indian doctor still wanted to return to work in Australia, his lawyer Peter Russo said.