The US government has the power to detain a man being held as an enemy combatant without charges, a federal appeals court has ruled.
Jose Padilla was arrested at Chicago airport in May 2002
The court overturned an earlier ruling that Jose Padilla, accused of planning an attack with a "dirty bomb", should either be charged or freed.
Mr Padilla, a convert to Islam, has been under arrest since 2002.
He is one of only two US citizens designated as enemy combatants. The other one, Yaser Hamdi, has been freed.
The three-judge panel ruled that President George Bush had the power to detain Mr Padilla, based on the resolution authorising military force which was approved by Congress in the aftermath of the 11 September attacks.
"The exceedingly important question before us is whether the president of the United States possesses the authority to detain militarily a citizen of this country who is closely associated with al-Qaeda," the Virginia court ruling said.
"We conclude that the president does possess such authority," added the ruling written by Judge Michael Luttig, who is seen as one of Mr Bush's possible nominations for the Supreme Court.
A federal judge had ruled earlier this year that Mr Padilla could not be held indefinitely without charge.
Lawyers have argued that the president is exceeding his authority by denying him access to lawyers and courts.
But the government says such detentions are necessary to prevent terrorism in the US.
A further appeal in the case is possible.