Australia wants 54-year-old Malka Leifer extradited for allegedly sexually abusing children while she was a teacher at a local school. Israel's state prosecution says she is feigning mental illness to avoid extradition. Her extradition is the subject of a separate court case.
Leifer's lawyer, Yehuda Fried, told the court Thursday his client was not a flight risk.
He said: "She has nowhere to go. She is wanted worldwide."
The prosecution had appealed after a lower court decision that would have seen Leifer freed from police custody on Friday.
Leifer was arrested following an undercover investigation at Interpol's request.