A Portuguese military captain, who was publicly humiliated by the Fascist Salazar government after working to restore Jewish life in the 1920s and 30s, is to have his name cleared 50 years after his death.

Captain Arthur Carlos Barros Basto, a First World War veteran decorated for his heroism, was stripped of his military commission and lost his pension in 1937, after a campaign against him by government figures.

But the Portuguese parliament has now approved a resolution calling for Captain Arthur Basto to be reinstated in the army. The resolution acknowledges that Captain Basto "was the target of political and religious segregation in 1937".

Captain Basto was not brought up Jewish but, after learning of his heritage, he studied the religion and worked tirelessly to found a yeshivah, a community newspaper and a shul in 1920s Porto.

His attempt to rebuild the long-lost Jewish community and bring the Conversos back to Judaism, nearly five centuries after the inquisition, angered the authorities. In the 1930s they began investigating him on trumped-up charges of homosexuality, eventually convicting him of having participated in circumcision ceremonies.

The court ruled that he had "performed the operation of circumcision of several students pursuant to a precept of the Israelite religion he professes" and claimed that Captain Basto lacked the "moral capacity" to serve in the army.

He lost his commission, a humiliation from which he never recovered before his death in 1961.

Despite the efforts of his wife and children, even after the collapse of the fascist government Captain Basto's reputation remained tarnished. But his granddaughter, Isabel Ferreira Lopes, has taken up the campaign and last year submitted a request to the Portuguese parliament to clear his name.

"Finally being able to rehabilitate his name - if it happens - will mean winning a battle that has been passed down across three generations," said Ms Lopes.

Abraham H Foxman, national director of the Anti-Defamation League, said the vote to restore Captain Basto's reputation was also one "in favor of Portugal's honour".

"The injustice committed against Captain Basto has weighed too long on Portugal's reputation in the Jewish community and on the conscience of Portuguese society.

"Just as this act of discrimination reflected a larger societal problem at the time, the long overdue rehabilitation of Captain Barros Basto reflects Portugal's commitment to human rights today."

Manuel Azevedo, founding president of Ladina, which has campaigned for justice in the case, said: "A great injustice has been almost righted. It is a victory of light over darkness, of the triumph of tolerance over intolerance.

"It is the recognition of Portugal's little known Jewish history, finally triumphing over the ubiquitous Inquisition that has plagued the Portuguese people."

He added: "The Portuguese parliament deserves our gratitude and recognition for finally correcting a long festering injustice which has stained all Portuguese people."