The Federal Court has ruled the Australian Defence Force was within its rights to sack outspoken conservative campaigner Bernard Gaynor.

Mr Gaynor, an Iraq War veteran turned reservist, initially won a case in 2015 claiming the ADF had breached his right to free speech when it sacked him in 2013 for making several public comments criticising the defence force's more inclusive policies towards women and homosexuals.

Mr Gaynor also said he didn't want gay people teaching his children, and engaged in a public stoush with high-profile transgender Army officer Cate McGregor.

""The supposedly apolitical ADF is now marching to the beat of a very political tune, drummed up by those who demand gay marriage and take pleasure in ridiculing Christianity," Mr Gaynor said in a statement in 2015.

However, the full bench of the Federal Court has now overturned the 2015 ruling, saying in a judgment released on Wednesday that the initial decision was correct, and the ADF was within its rights to dump Mr Gaynor for publicly criticising the body and making statements that went against its values.

"Measured against (Mr Gaynor's) statements, it is not difficult to conclude that it was open to (the ADF) to reach the conclusion that the retention of (Mr Gaynor) in the Army was not in the interests of the Army," the judgment reads.

Mr Gaynor was also dumped as a Queensland Senate candidate for Katter's Australia Party over his comments.

He is currently affiliated with the anti-Islam Australian Liberty Alliance party.