A Muslim witness in an Australian fraud trial must remove her full veil while giving evidence, a judge has ruled.

Western Australia district court judge Shauna Deane said it would be inappropriate for the woman to testify with her face covered by the niqab but did not specify what the woman could wear. The judge said the woman's decision to wear the full veil came down to "reasons of modesty" and a "personal preference" in her interpretation of Islam, rather than a religious requirement.

Defence attorneys argued that the jury needs to be able to see the witness's facial expressions to assess what she says, while prosecutors said the woman's discomfort without the garment could affect her testimony.

Deane stressed that her decision applied only to this case and was not setting a precedent for other courts, but the issue has sparked national interest and drawn comparisons to France and Belgium, where there are efforts to ban the wearing of Islamic face veils. In Australia, some Muslims wear head scarves, but burqas which cover the entire face are rarely worn.

The woman is an Islamic studies teacher who has been identified only by her first name, Tasneem. She is 36, has lived in Australia for seven years and has worn a burqa since she was 17.

She is a prosecution witness in a case against the director of a company that ran a Muslim women's college in Perth. The director, Anwar Sayed, is accused of inflating the number of students at the school in 2006 and 2007 to claim hundreds of thousands of dollars in state and federal grants.

Prosecutor Mark Ritter told the court that Tasneem usually removes the burqa only when she is with her family.

The judge did not say whether the woman would be able to testify via video.

The burqa debate has prompted comments from politicians campaigning ahead of Australia's federal election on Saturday. Earlier this month, the opposition leader, Tony Abbott – who hopes to become prime minister – said he found the garments "confronting" and wished fewer Australians wore them.

The first jury in Sayed's case was discharged earlier this month after the trial time ballooned from the original estimate of 10 days, to five weeks, which caused attendance issues for several jurors. The trial will resume with a new jury in October.