A Papua New Guinean politician, whose account of a shooting at the Manus Island detention centre was rejected by Australian Immigration Minister Peter Dutton, has been reinstated as a Member of Parliament by the PNG Supreme Court.

Key points: Ronny Knight disagreed with Mr Dutton over what led to shooting

Ronny Knight disagreed with Mr Dutton over what led to shooting Mr Dutton labelled Mr Knight a "discredited witness"

Mr Dutton labelled Mr Knight a "discredited witness" PNG Chief Justice questions allegations levelled against Mr Knight

Manus MP Ronny Knight was dismissed last week for misconduct in office over the purchase of a boat for the island.

This week, his comments about what led to the Good Friday shooting at the detention centre were at odds with Mr Dutton's view.

The Immigration Minister said Mr Knight was a "discredited witness" and incorrectly said he had been "convicted of fraud".

Mr Dutton demanded an apology from media outlets — including the ABC — that had interviewed Mr Knight.

But PNG's Chief Justice Sir Salamo Injia found there were no allegations Mr Knight obtained a personal benefit from the boat purchase and said there were serious concerns with how he had been cited by the PNG Leadership Tribunal.

"There is no question that the motor vessel was purchased for a good cause," he said.

"The appellant [Mr Knight] did not stand to benefit personally from the decision of the committee [to purchase the boat]."

The Chief Justice ordered the decision to dismiss Mr Knight be stayed pending an appeal, and that Mr Knight remain in office and be allowed to contest the upcoming election.

'Serious issues' with allegations against Knight

The leadership tribunal is a quasi-judicial body, not a court, that investigates those in elected and appointed positions for alleged misconduct in office.

It cited Mr Knight over the purchase of the boat, the MV Trader Star, early in his term and dismissed him from office in 2015.

That decision was stayed pending an application for judicial review that was eventually dismissed on April 19, 2016, meaning the tribunal's decision to dismiss Mr Knight took effect.

But the Chief Justice found "serious issues" with the way the tribunal's allegations against Mr Knight were constructed and how the tribunal was conducted.

"There is evidence that those proceedings were not conducted properly and may have gone wrong," he said.

The Chief Justice ordered the electoral commission to allow Mr Knight to nominate for the upcoming 2017 elections and said he could continue as an MP.

Mr Knight says the decision by the Supreme Court to stay his dismissal and allow his appeal showed he acted correctly.

"It gives me faith that our judicial system is working properly and I'm very thankful to the Chief Justice for his outlook on things," he said.

"I know that I shall be given a fair review of what's happened and I shall be vindicated."

He was critical of Mr Dutton for saying he had been convicted of fraud, when he was instead dismissed for misconduct in office by the tribunal.

"A tribunal is not a criminal court in any way whatsoever," he said.

"I have never been convicted of anything in my life. He should stick to the facts that are on the ground.

"We are talking about something that is happening in my area amongst my people."