The full bench of the Australian Federal Court on Thursday will hear a government appeal against a judge's decision to reinstate the visa of Indian doctor Mohamed Haneef, who was cleared of terrorism charges after being arrested in connection with the foiled United Kingdom bombings.

Prosecution lawyers lodged the appeal in September after Federal Court Justice Jeffery Spender quashed Immigration Minister Kevin Andrews' decision to cancel Haneef's visa.

Justice Spender ruled in August that Andrews had applied the wrong legal test by canceling the visa because of Haneef's 'association' with UK terror suspects Sabeel and Kafeel Ahmed -- his second cousins.

However, Justice Spender said that if the minister had argued Haneef was a person of interest to UK authorities and that he had been charged with an offence at the time of the cancellation, the decision would have been upheld in court.

Ahead of his latest court battle to be allowed to return to work in Australia, Haneef is in good spirits, according to his lawyer.

Solicitor Peter Russo, who has represented Haneef since his arrest in July, said his client was holding up well despite the legal delays hampering his efforts to return to work at the Gold Coast Hospital.

"He's okay -- there's not a lot he can do about it so he's pretty well resigned to the fact that we've just got to go one step at a time," Russo said.

The court will also hear an appeal from Haneef's lawyers against Justice Spender's rejection of their argument that the minister had cancelled the visa for "an improper purpose".

They argue that the cancellation, which came hours after Haneef was granted bail, was aimed at keeping the then terror suspect behind bars rather than deporting him.

Haneef was charged with recklessly providing support to a terrorist organisation on July 14, but the charge spectacularly collapsed less than a fortnight later.

Following the hearing on Thursday and Friday, the three judges are expected to reserve their decision for a later date, though Russo is hopeful that the result will be known by the end of the year.

However, Russo stopped short of predicting a positive outcome for his client.