A US court of appeals has refused a Bush administration request to transfer terror suspect Jose Padilla from military to civilian custody.
Jose Padilla, a US citizen, was arrested in Chicago in May 2002
Mr Padilla, a US citizen, has been held as an enemy combatant for more than three years on suspicion of planning to explode a radioactive "dirty bomb".
His indefinite detention is due to be reviewed by the US Supreme Court.
The appeals court said moving him now made it appear as if the government was seeking to evade the judicial review.
Mr Padilla was arrested in Chicago in May 2002 and is one of only two US citizens to be held as an enemy combatant.
The 35-year-old was finally charged last month with planning to undertake "violent jihad".
The indictment accuses him and four other people of conspiracy to kidnap, murder and maim US citizens overseas, but does not mention the allegation about the "dirty bomb".
Within days of the charge, the Bush administration applied to transfer Mr Padilla from a military facility in South Carolina to a civilian jail in Florida.
The government said his transfer to a civilian prison would mean his appeal to the Supreme Court over his indefinite military detention was moot and should be dismissed.
However, the Virginia appeals court said on Wednesday that the hearing should take place.
It also turned down a request by the government to overturn a ruling by a lower court in September which upheld the government's right to hold Mr Padilla indefinitely - the basis of his appeal to the Supreme Court.
Judge Michael Luttig said the Bush administration had risked its "credibility before the courts" by appearing to use Mr Padilla's indictment as a way to avoid the Supreme Court review.
He said the government's actions "have given rise to at least an appearance that the purpose of these actions may be to avoid consideration of our decision by the Supreme Court".
Mr Padilla, also known as Abdullah al-Muhajiya, is a former Chicago gang member who converted to Islam. He could go to jail for life if convicted.