Charles Zentai, now 90, was accused by Hungarian authorities of beating to death a Jewish teenager, Peter Balazs, in Budapest in 1944.
Australia's highest court ruled that Zentai could not be extradited to the country of his birth because the offence "war crime" did not exist in Hungarian law at the time the murder was alleged to have been committed.
Zentai: Will stay n Australia (Photo: AP)
Zentai, who migrated to Australia in 1950 and became an Australian citizen, has maintained his innocence throughout his legal challenge.
Zentai, a 23-year-old warrant officer in the pro-Nazi Hungarian military at the time of Balazs' death, said he was not in Budapest when the attack took place.
A spokesperson for Jason Clare, Australian Minister for Home Affairs, confirmed that Zentai would not be surrendered to Hungary.
A retired mental health nurse, Zentai was arrested by Australian police in 2005 after Hungary requested his extradition. Australia ordered in 2009 that Zentai be sent to Hungary, but the Federal Court overturned that ruling in 2011.
The government contested that decision, but Wednesday's court ruling threw out its appeal and leaves the government with no further challenges.
Zentai's family welcomed the ruling, but told Australian radio that they wanted the Australian government to apologize.
"As a soldier I just had to carry out orders ... but none of those orders I was given had anything to do with rounding up Jews or torturing them or anything like that," Zentai told Australian television in 2008.
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