A court ruling Friday cleared the way for an Indian doctor held briefly on terrorism charges to return to his job in an Australian hospital.

In a further boost for Mohamed Haneef, Immigration Minister Chris Evans said the Indian doctor was free to return to Australia under his original visa.

Lawyers for Mohamed Haneef were delighted that the Federal Court threw out an appeal against the reinstatement of his work visa.

Lawyer Peter Russo said his client was not certain he wanted to return to Australia but was keen to clear his name.

Russo told ABC Radio that "as time goes by I don't know whether that wish (to return to his job) is as strong as it was when we started."

Russo said no decision had been made about whether Haneef would seek compensation.

Australian police arrested Haneef at Brisbane airport on July 2 as he was boarding a flight to India just days after failed terrorist attacks in Britain.

He was held for 12 days before being charged with providing support to a terrorist organization. When he left Britain to come to Australia he had given his mobile phone SIM card to a cousin, Sabeel Ahmed, one of the those held over the attacks in Britain.

The charge was dropped after it was decided there was no prospect of securing a conviction against the 27-year-old. Because his visa had been cancelled on character grounds, Haneef was obliged to give up his job at the Gold Coast Hospital and return to India.

Haneef has spent most of the past five months at his family home in Bangalore. He is currently in Saudi Arabia on the hajj pilgrimage.

Haneef's family in Bangalore were elated about the court's decision on Friday which happened to be Eid al-Adha.

"It is a double Eid for us. We are feeling very happy and proud," Haneef's father-in-law, Ashfaq Ahmed told reporters.

But it was still not clear whether the doctor would return to Australia. "We have not decided about it, we will decide after he comes back (from hajj)," Ahmed said.

Medical Association spokesman Philip Morris said Haneef would be welcomed back to Queensland to take up his old post at the Gold Coast Hospital.

"When he was here before there was no question about his medical competence of his commitment to care for patients," Morris said.

Queensland Premier Anna Bligh said she would welcome Haneef's return. "We'd be very pleased to have him and any other suitably qualified medical practitioners in our hospitals," she said.