Former Melbourne school principal Malka Leifer will remain in custody until an Israeli Supreme Court judge considers an appeal to stop her being released to home detention.
On Wednesday, the Jerusalem district court ruled that Ms Leifer could be released from police custody on Friday March 9 at 10:00am, after influential Israeli Rabbi Yitzchak Dovid Grossman argued it was "humiliating" and bad for her mental health to stay in jail.
The former principal of the ultra-orthodox Addas girls school in Melbourne has been in custody since February 12 when Israeli police rearrested the 54-year-old, accusing her of faking mental illness for the past three years in order to avoid extradition to Australia.
Ms Leifer is wanted by Victorian police on 74 charges of child sexual abuse, including rape.
On Thursday afternoon in the Israel Supreme Court, Israeli state attorney Matan Akiva argued Ms Leifer's release to home arrest could harm the chance of her appearing at future extradition proceedings.
"We have to take into consideration that Israel gave Australia full guarantees to cooperate on an international level," Mr Akiva told the court.
He told Judge George Karra that "because we can prove she is faking her behaviour then we cannot leave her outside detention" and that "as soon as she can find the time she will run away".
The state attorney referred to a 2014 court ruling that allowed Ms Leifer to live under house arrest during extradition proceedings, which she then avoided for the next three years.
"This is what changed the path of this trial and we cannot repeat this same mistake," Mr Akiva said.
Mr Akiva also tabled a psychiatric report that was written two weeks ago, after court-appointed doctors observed Ms Leifer at their facility.
He told the ABC the report had been signed and approved by the chief Jerusalem district psychiatrist and it said Ms Leifer "was fit to face court".
Ms Leifer's lawyer Yehuda Fried argued "this extradition case is going to take years" and it would be bad for his client's mental health to remain in jail during proceedings.
"We need to find a solution for her release," Mr Fried told Judge Karra.
Mr Fried said Ms Leifer's passport had been blocked and she was not going to try to leave Israel.
"Where would she go? She comes from a prestigious religious family here," he told the judge.
Judge Karra ordered that Ms Leifer remain in custody in a mental health facility until he makes a judgement on the appeal.
Outside the court, Shana Aaronson from Jewish Community Watch told the ABC she was hopeful the Supreme Court judge would rule in favour of the appeal and keep Ms Leifer in custody.
The child protection activist said many in Israel's religious community were outraged Rabbi Grossman chose to appear as a character witness in the district court in support of the alleged child abuser.
"He's been receiving a tremendous amount of feedback from pretty much everyone. Everyone is incredibly displeased with this and horrified that he would do such a thing. It's outrageous," she told reporters.