Israel's Supreme Court has ordered the release of an Australian woman who was arrested during a pre-dawn military raid in the West Bank.

Bridgette Chappell, 22, from Canberra, was arrested with a Spanish woman after Israeli soldiers burst into the apartment they shared in Ramallah.

The Israeli government says Ms Chappell, who was studying Arabic and politics at Birzeit University in the West Bank, was arrested for overstaying her visa.

But she was also active in the International Solidarity Movement (ISM) - a pro-Palestinian organisation committed to resisting Israel's occupation of the West Bank.

Israel alleged Ms Chappell had taken part in illegal protests against Israel's occupation of the West Bank.

But Ms Chappell's lawyer argued in court that Israel had no jurisdiction in Ramallah on matters unrelated to security.

Ms Chappell lashed out at Israel from the dock before being led away.

"It's completely illegal what they're doing. They're trying to crush the popular resistance in Palestine," she said.

The court has ordered the women's release on bail until it can consider their appeals against deportation.

They have been ordered not to return to the West Bank.

Ms Chapell says she is currently in Tel Aviv and has been in touch with the Australian consulate.

"It's still pretty up in the air. I was released but I also have to appear in court again," she said.

"I can stay as long as the trial continues but we'll see what happens. I'm really going to try and fight to stay as long as I can."

She said that on the night of the raid she woke up at 3am to heavy banging on her door at the headquarters of the ISM in Ramallah.

"I looked out the window and I could see a line of army jeeps outside in the street. The next thing I knew about 15 soldiers came bursting into the house pointing their guns at us," she told ABC radio.

"The soldiers barged in, pointed their guns at us and asked us for our passports, which is actually illegal.

"IDF (Israel Defence Force) soldiers don't have the jurisdiction to ask you for your passports.

"It was ridiculous. It was a complete military operation. The IDF can say it was to do with our visas all they like but we know that's not the real reason. It was a very convenient excuse for them to take us."