Judges have criticised the home secretary for his handling of the case of an Iranian gunman convicted for his role in the embassy siege in 1980.
Two hostages and five gunmen died during the siege
Fowzi Nejad has been in prison for 24 years, and three appeal judges said his case needed "urgent attention".
Nejad won his appeal against David Blunkett's decision not to reduce his life tariff from 25 years to 22.
Mr Blunkett should now say whether Nejad is to be deported and to what country, the Court of Appeal urged.
Nejad was one of six heavily-armed terrorists who on April 30 1980 seized the Iranian Embassy in Princes Gate, London, and held 26 people hostage.
During the six-day siege, two hostages were murdered, but not by Nejad, who
was the only survivor among the terrorists after the SAS stormed the building.
Lord Justice Scott Baker said in a Court of Appeal ruling on Tuesday that although the terrorist had won his appeal, which meant a reduction in the tariff, the result was "wholly academic".
Nejad, an Iranian, was still in a closed prison and it would be highly unusual for him to be released on life licence without first spending at least two years
in open conditions.
"The papers before the court indicate a disturbing inactivity on the part of the Secretary of State," said Lord Justice Scott Baker.
He said that this had meant that the Parole Board had been unable to recommend that Nejad be moved to an open prison.
Nejad, 46, will want to know about future release plans, Lord Justice Scott Baker said.
Five life sentences
"What is plain is that the appellant's period in custody should not be
allowed to increase as a result of further inactivity on the part of the
Secretary of State."
Nejad was sentenced to five life sentences after pleading guilty to conspiracy
to murder, false imprisonment, possession of a firearm and two charges of
The trial judge recommended that he serve a minimum of 20 years and the then
Lord Chief Justice, Lord Lane, recommended 25 years.