The Tamil family fighting deportation to Sri Lanka have been given another reprieve, after a Federal Court judge ruled there was enough evidence for a protection visa claim to go to trial.

Key points: The judge ruled any potential harm to the two-year-old at the centre of the case outweighed any potential impact on the Government

The judge ruled any potential harm to the two-year-old at the centre of the case outweighed any potential impact on the Government The family is likely to remain in detention for months until the trial finishes

The family is likely to remain in detention for months until the trial finishes A family friend said the community of Biloela was overjoyed at the development

The ruling means Nadesalingam Murugappan, known as Nades, Kokilapathmapriya Nadesalingam, known as Priya, and their two children can stay in Australia until the court case is finalised.

Nades and Priya arrived in Australia separately by boat from Sri Lanka in 2012 and 2013, and their children Kopika and Tharnicaa were born in Australia.

The family has fought and lost numerous court battles to remain in the country.

They had been living in the central Queensland town of Biloela until they were taken from their home and placed in immigration detention in Melbourne in March 2018.

They were flown to Christmas Island after a last-minute injunction stopped them from being deported late last month.

A crowd of supporters gathered outside court for Thursday's hearing. ( ABC News: James Oaten )

The injunction just applies to two-year-old Tharnicaa — who lawyers argue has not had her claim for asylum properly assessed — but the family was kept together as her case made its way through the courts.

On Thursday, Federal Court Justice Mordecai Bromberg agreed there was enough evidence to take the matter to trial. A date for that trial has not yet been set.

"The applicant has established a prima facie case that the power under s198 of the Migration Act is not available to the [Government] to remove her from Australia," Judge Bromberg said.

The judge also said that the risk that Tharnicaa would "suffer" if deported outweighed any potential impact on the Government.

"An interlocutory injunction restraining the respondents from removing the applicant from Australia until the hearing and determination of her proceeding at trial has been justified," he said.

Family will stay on Christmas Island: Peter Dutton

Prime Minister Scott Morrison, Home Affairs Minister Peter Dutton and Immigration Minister David Coleman had all ruled out intervening in the case.

Responding to the decision on Sky News, Mr Dutton said he respected the court's ruling which "may well go to the High Court".

Mr Dutton was also questioned about his use of the term "anchor babies" in reference to the case.

He said people could draw their own conclusions on the family's circumstances.

"This family was told before they had children that they could not stay. Now the claim is that they must stay because the children don't know Sri Lanka, they only know Australia," he told interviewer David Speers.

Mr Dutton said the family would remain on Christmas Island until the conclusion of the case, where he said they were not in detention but were living "in the community".

But then, speaking to Sky News through a translator from Christmas Island, Priya said that was a "complete lie".

"We are kept in the detention centre, we can't go outside this compound, we are surrounded by Serco guards and we have no access to go outside of this compound."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 1 minute 3 seconds 1 m 3 s Carina Ford said she was "relieved" about the ruling but there was still a way to go.

Outside court, family lawyer Carina Ford said the conditions on Christmas Island meant they were in "alternate detention".

"It is isolating, they haven't had any children to play with. Given that they're the only ones there I think it's probably self-explanatory how I feel about that issue," she said.

Ms Ford said the timeline for a trial was uncertain, but it was still "early days" and the process could take months.

Family friend Angela Fredericks says the Biloela community was overjoyed to hear the news the deportation had been delayed.

"There is just tremendous relief and joy right now across the community. Just so pleased that we feel like we are a step closer to having our friends back home," she said.



Case focuses on technical visa rules

The case before the Federal Court in Melbourne has often been highly technical, with lawyers focusing on a period in 2017 when the then-immigration minister Peter Dutton allowed some boat arrivals to submit a request for a visa.

Both children were born in Australia but are not Australian citizens. ( Supplied: Tamil Refugee Council )

An application for the mother, Priya, was made and subsequently denied.

Lawyers argued the same privilege should extend to the toddler, Tharnicaa, but the Government maintained that grace period had passed.

Lawyers also argued that the Government could not detain Tharnicaa as her protection visa was "still in train".

"It is a very seriously live question whether my client has been lawfully detained," barrister Angel Aleksov told the court on Wednesday.

If the two-year-old's case is successful at court, it would not automatically grant the family the right to stay in Australia.

Instead, Ms Ford said there could be "a range of ways that it's settled".

"It will either need the Minister to intervene or the process to be undertaken in a way that states that international obligations are owed," she said.