Plans to extradite an elderly Perth man wanted in Hungary over the alleged murder of a Jewish teenager during World War II has been referred back to the home affairs minister.

Charles Zentai, 89, is wanted by Hungarian military authorities in relation to the killing of Jewish teenager Peter Balazs in Nazi-occupied Budapest in November 1944.

Mr Zentai is alleged to have captured the victim, dragged him to the barracks, beat him until he died and dumped his body in the Danube River.

Advertisement: Story continues below Home Affairs Minister Brendan O'Connor approved Mr Zentai's extradition to Hungary in 2009 but that was overturned in July last year by Justice Neil McKerracher, who ruled Mr O'Connor's extradition decision was flawed.

The government appealed against the decision and interstate Federal Court judges Anthony North, Christopher Jessup and Anthony Besanko concluded a two-day hearing of the appeal in May, reserving their decision.

Today, the Federal Court judges upheld parts of the challenge but dismissed most of the arguments.

Peter Johnston, a lawyer acting for Mr Zentai, said Mr O'Connor must determine what constituted a "war crime" before the case could continue.

Hungarian-born Mr Zentai, a widower and great-grandfather, migrated to Perth from Germany as a refugee in 1950 before becoming an Australian citizen in 1958.

He has been fighting to stay in Australia for more than six years and maintains he is innocent.

Mr Zentai can lodge a further appeal in the High Court.

watoday.com.au