The Federal Court has found Peter Dutton unreasonably delayed making decisions on applications for citizenship by refugees in a landmark ruling that has implications for thousands of would-be citizens.

The court has also ruled that Mr Dutton erred in rejecting the applications for citizenship of the two Afghan refugees several weeks after they commenced legal proceedings. The pair had been permanent residents of Australia for more than four years.

Immigration Minister Peter Dutton's office declined to comment on the Federal Court ruling.

Justice Bromberg of the Federal Court ruled that the decisions to reject their applications were invalid and "at law no decisions at all" and dismissed Mr Dutton's submission that he deny the two men relief.

The case provides hope for more than 10,000 refugees, most of whom came to Australia by boat before the decision by the Rudd government that no one processed offshore would ever be settled in Australia.