Alleged Nazi war criminal Charles Zentai will not be placed behind bars while he appeals a decision on his extradition to Hungary over an alleged murder in 1944.

Mr Zentai, 87, is appealing a previous decision by Federal Court Justice John Gilmour to uphold a magistrate's ruling that his extradition could proceed.
He is appealing to a full bench of the Federal Court.

Justice Gilmour this morning granted Mr Zentai an extension of bail, meaning he will not be placed in custody while waiting for the appeal to go ahead.

The decision came after Mr Zentai’s lawyers argued the elderly man's health would further deteriorate if he was jailed.

Hungarian authorities claim that as a soldier, Mr Zentai dragged A Jewish youth to his unit’s army post and he and two other soldiers bashed him to death.

The three allegedly threw his body into the Danube River.

Mr Zentai has denied the charge and says he was not in Budapest at the time.

The court was told the Republic of Hungary had consented to the bail extension on certain conditions, which include a surety and surrendering his passport but Justice Gilmour said he would not allow bail simply because the parties had consented.

The judge said he there was no evidence to show Mr Zentai would not receive adequate health care in custody but he also noted there was no flight risk and the fact that Hungary had consented to granting bail meant it would not hinder the bilateral treaty existing between that country and Australia.

Outside court, Mr Zentai’s son Ernie Steiner said the family were pleased with the outcome.

"The stress of the situation he would be under (in custody)...it would just bring on something that needn't happen," he said.

Mr Zentai suffers from ongoing heart problems.

A hearing date has not been set yet for the full bench court appeal.

thewest.com.au