Malka Leifer, the former school principal accused of child sexual abuse at a religious Jewish school in Australia, has been denied bail by a judge in Israel.

The ruling was handed down days after Israel’s deputy health minister, Ya’acov Litzman, who leads an ultra-Orthodox party, was accused of obstructing the case for her extradition to Australia.

Police questioned Litzman last week over suspected ethics violations, following a months-long investigation by the fraud investigation unit. Israeli media have since reported he allegedly pressured doctors to falsify psychiatric evaluations that would deem Leifer unfit to face trial in Australia.

On Monday, Leifer’s defence team argued their client’s mental state in detention had deteriorated to the point that her life was in danger. The judge denied the appeal and said Leifer should undergo a fresh psychiatric test.

It was not clear if the ongoing investigation into Litzman affected the judge’s decision. Politicians and Jerusalem’s deputy mayor have called for the minister to resign if the allegations are proved correct.

The deputy health minister, Ya’acov Litzman, is being investigated over suspected ethics violations. Photograph: Gali Tibbon/EPA

Litzman has been criticised in the past for visiting a rabbi who served five months in prison for sex crimes, and for bailing out an ultra-Orthodox woman accused of child abuse for starving her toddler. Members from the ultra-Orthodox community threatened to riot if the woman was not released and Litzman was quoted at the time saying bail would “pacify the situation”.

The office of the deputy health minister, who heads the United Torah Judaism alliance in parliament, released a statement last week denying any wrongdoing in the Leifer case. “Litzman is confident of his innocence,” it said.

After Leifer was arrested in 2014, the Jerusalem district psychiatrist submitted a medical report deeming her mentally incompetent and she was released from house arrest. However, she has since been declared able to stand trial after further medical opinions.

The Israeli case against Leifer, a former head of the Adass Israel girls’ school in Melbourne, has been entangled in controversy and delays. Last year, the state prosecution service said Leifer had feigned mental illness. After a private investigator surreptitiously filmed what he said was Leifer living a “normal, healthy” life, Israeli police rearrested her.

Jeremy Leibler, the president of the Zionist Federation of Australia, said Leifer should be extradited as soon as possible.

“Leifer’s extradition has been a frustratingly drawn-out process,” he said.

If successfully extradited to Australia, Leifer will face 74 charges, including indecent assault and rape. In addition to the extradition case, the Israeli citizen, who has been living in a settlement in the occupied West Bank, also faces the possibility of an indictment under contempt of court charges for allegedly lying about her mental health.

• This article was amended on 25 July 2019. An earlier version incorrectly said that Leifer held both Israeli and Australian citizenship.