Papua New Guinea's Supreme Court has dismissed an attempt by the country's Prime Minister to prevent anti-corruption police from investigating him.

Key points: Anti-corruption police want to question PNG Prime Minister, Finance Minister

Anti-corruption police want to question PNG Prime Minister, Finance Minister Court's dismissal means investigation can proceed

Court's dismissal means investigation can proceed Despite losing, Prime Minister says he welcomes decision

Anti-corruption police sought to arrest and interview Peter O'Neill in June 2014.

But the Prime Minister and Finance Minister James Marape sought court orders effectively stopping police from arresting or interviewing them in relation to the payment of about $30 million of allegedly fraudulent legal bills to law firm Paraka Lawyers.

The anti-corruption taskforce was then disbanded and the Attorney-General and Police Commissioner replaced.

On Tuesday, a three-man bench of the Supreme Court dismissed all orders preventing anti-corruption officers from further investigating the matter.

But a separate court order still prevents the police from arresting the Prime Minister over the legal bills.

Mr O'Neill said he welcomed the court's decision.

"This is another indication the judiciary in Papua New Guinea is vibrant and independent in its decision-making," he said.

Mr O'Neill said the case was about procedural matters and did not affect his outstanding arrest warrant.

"This case of appeal on Justice Ere Kariko's decision was a question concerning procedural matters and has absolutely no bearing on whether any person should be arrested or not," he said.

"The case relating to legal fees for the Paraka matter remains outstanding before the court through a judicial review by Senior Judge, Justice Bernard Sakora, which also reaffirmed that the warrant of arrest be stayed until the judicial review is heard.

"I appeal to all citizens to remain calm, respect the rule of law, and allow the judicial process to take its course."

'Now we can do our job'

The director of PNG's Fraud and Anti-Corruption Taskforce, Matthew Damaru, said the decision allowed police to continue their investigations.

"Now we can do our job, basically," he said.

"That part of the obstacle is gone."

Mr Damaru and his deputy Timothy Gitua had been prevented by the Secretary of PNG's Department of Justice and Attorney from using external legal counsel to fight the appeal, but appeared in person and won.

The anti-corruption police have already questioned the new PNG Attorney-General over his role in preventing the Prime Minister's arrest, and say the decision leaves them free to properly investigate a range of allegations against senior members of the PNG Government.