The world’s most prominent Nazi hunter has condemned an Australian court for refusing to extradite a man accused of murdering a Jewish youth during the Holocaust.

Dr Efraim Zuroff, from the Simon Wiesenthal centre, described the decision not to deport alleged war criminal Charles Zentai to Hungary as “a sad day for Australian justice”.

Charles Zentai, an officer in the Nazi-allied Hungarian army during the Second World War, allegedly beat a 14-year-old to death in 1944 for not wearing a yellow star.

Now 88, he denies the charges, claiming he was not in Budapest at the time, and has been fighting extradition for five years.

In the latest of several appeals an Australian court found that alternatives including prosecution at home had not been explored sufficiently. The ruling saw an extradition order made in October 2009 overturned.

Justice McKerracher of the Federal Court ruled that "the more humane solution" of trying the suspect in Australia had been dismissed without justification, and that it would be oppressive to extradite someone of advanced age and poor health.

The case against Mr Zentai was first brought by the Simon Wiesenthal Centre. Mr Zentai is one of their 10 most-wanted suspects.

The Australian government has not said whether it will mount a further challenge. But Dr Zuroff said he was disappointed and will continue to push for an appeal.

He said: “The whole issue of his age is totally irrelevant because there's never been a single country, including Australia, which has ever limited prosecution based on age.

“The fact that many years passed without him being brought to justice is totally irrelevant, the passage of time in no way diminishes the guilt of the killers.”