A two-year-old girl born in Australia to Tamil asylum-seeker parents was "not afforded procedural fairness" in her asylum bid, and the formerly Biloela-based family cannot be immediately deported, the Federal Court has decided.

Key points: Priya, Nades, and daughters Kopika and Tharunicaa remain in detention on Christmas Island after an injunction on an attempt to deport them

Priya, Nades, and daughters Kopika and Tharunicaa remain in detention on Christmas Island after an injunction on an attempt to deport them The family had been living in central Queensland's Biloela but in 2018 immigration officials transferred them to detention

The family had been living in central Queensland's Biloela but in 2018 immigration officials transferred them to detention The Federal Court says both parties have seven days to agree on an order declaring the two-year-old's application was not afforded procedural fairness

Justice Mark Moshinsky delivered the judgement in Melbourne this morning, with lawyers for the family receiving the decision over the phone.

Priya, Nades and their daughters four-year-old Kopika and Tharunicaa, two, had been living in Biloela in central Queensland, but in 2018 immigration officials transferred them to a Melbourne detention centre.

They remain in detention on Christmas Island after a last-minute injunction on an attempt to deport them to Sri Lanka.

The court also ruled that Tharunicaa did not have the right to have her application automatically assessed.

According to the Federal Court ruling, both parties — lawyers for Tharunicaa and the Minister for Immigration — have seven days to agree on an order that would declare that the two-year-old's application was not afforded procedural fairness.

If the lawyers cannot agree, they have 14 days to file their proposed orders and written submissions.

The injunction preventing deportation remains in place during this period.

Lawyers argued girl's claim not properly assessed

The Tamil family has fought and lost numerous court battles to remain in Australia, saying they fear persecution if they are returned to Sri Lanka.

The Federal Government has maintained the status of Tharunicaa is linked to that of the rest of her family, and their bids for protection visas were denied in 2017.

Hearings in the case were held in February.

Tharunicaa's lawyers argued she had not had her claim for asylum properly assessed.

The family's lawyer Carina Ford said today's 60-page judgement was a win "of sorts".

"There's lot to take in on it, and also to work out where we go from here," she said.

"Ultimately it's a far better result than losing on both grounds.

"I do feel a sense of justice has been done, even though we're not at the final result."

Ms Ford said the legal process was still far from over.

"It's always been open for the Minister to consider releasing the family back to the community," Ms Ford said.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 1 minute 33 seconds 1 m 33 s In August, Peter Dutton said the family was told they would not be settled in Australia ( Supplied: Channel 9 Today Show )

Mother says 'it's a happy day today'

The family has been backed by a vocal Biloela-based supporter group, Home To Bilo, led by family friend Angela Fredericks.

She said the legality of the situation was very complicated, but the family was positive about today's developments.

"[Priya's] words were 'it's a happy day today'. You could hear the smile on her face, and they're definitely feeling some relief today," Ms Fredericks said.

She said the Biloela community was also buoyed by the outcome.

"After a very anxious night, lots of messaging, we're all feeling such relief today that we do have another reprieve and we do see this as another small step to getting them home," Ms Fredericks said.

"It's going to be really fascinating to watch what happens in the next seven days as the lawyers work out what the next step is.

"The Minister can actually make a very easy decision and actually just use his powers to bring this family home [to Biloela] now."

Supporters of the family attended a Federal Court hearing in Melbourne in 2019. ( ABC News: Elias Clure )

The Tamil Refugee Council said that regardless of the ongoing proceedings, the family should be released from detention on Christmas Island and allowed to return to Biloela.

Spokesperson Aran Mylvaganam said the children especially were not coping well with detention.

"The Australian Government is spending obscene amounts of money to make an example of the family by holding them on Christmas Island and forcing them to fight for their safety through the courts," he said.

"Tharunicaa and Kopika are wasting away in detention. They are confused and scared on Christmas Island. They are not eating properly."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 2 minutes 8 seconds 2 m 8 s Through family friend Vashini Jayakumar, Priya told the ABC in September her daughters were 'very upset'

Lawyer Carina Ford said recent COVID-19 restrictions had further isolated the family.

"They have been in detention for two years and it's a family [of] two little girls that really have done absolutely nothing wrong," she said.

"I'm hoping that maybe a bit of common sense and reasonableness, even noting the cost of them remaining in detention in times like this, may lead the ministers to reconsider the position. That's what I'm hoping for."

Minister had 'power' to 'lift the bar'

Justice Moshinksy found that in May 2019, the Minister for Immigration requested the department to prepare a full brief on the applicant's family, "including the option that the Minister exercise the powers to lift the applicable bars to enable them to apply for protection visas".

He continued:

"Thus, the Minister decided to consider exercising the power to lift the bar in respect of the applicant.

The court found Tharunicaa, here sitting in her father's lap, did not have the right to have her application automatically assessed. ( Twitter: @HometoBilo )

"I conclude that the relevant processes undertaken by the department, including the conduct of the August 2019 Assessment, had a statutory basis.

"I also conclude that the processes affected the applicant's interests, and so the rules of procedural fairness applied.