Stockholm district court on Wednesday decided to uphold a warrant for the arrest of WikiLeaks founder Julian Assange in connection with sex assault allegations.
In a statement on the Swedish Court Service's website, the court said Assange remains a suspect for crimes including unlawful coercion, sexual molestation and rape and that there was still a risk that he would fail to cooperate with the authorities or submit to punishment.
The judge said that the restrictions on Assange's liberty following his arrest in the UK were not disproportionate. "Neither does the prosecutors handling of the case nor the fact that Julian Assange has been granted a political asylum and is presently residing in an embassy lead to the conclusion that the order should be revoked."
"The deadlock continues," said Tomas Olsson, one of Julian Assange's Swedish lawyers, to the media at Stockholm District Court.
Olsson indicated that his client would appeal the decision.
The decision is likely to mean that the 43-year-old Australian will remain in the Ecuadorian embassy in London, where he has been holed up for the past two years after having exhausted all legal options in the British courts to avoid being extradited to Sweden.
Wednesday's hearing was held following a change in Swedish law which has been interpreted to mean that Julian Assange's prosecutors must hand over evidence against him - including text messages from one of the Swedish women at the centre of the case.
The texts allegedly indicate that she did not want to press charges against him for rape.
Assange has said that he fears that being sent to Sweden would be a pretext for transferring him to the United States, where WikiLeaks sparked an uproar with its publication of thousands of secret documents.
The warrant was issued over allegations of rape and sexual molestation which Assange has denied.
The WikiLeaks founder sought refuge in Ecuador's embassy in Britain in June 2012 after exhausting all legal options in British courts to avoid being extradited to Sweden.
WikiLeaks repeatedly drove the global news agenda with startling revelations of the behind-the-scenes activities of governments around the world.
From confidential assessments by US diplomats of Chinese leaders to revised body counts in Iraq, the WikiLeaks documents provided the public with an unprecedented look under the hood of international politics.
Assange's legal team had argued that Swedish prosecutors have dragged out the case for an unreasonably long period by not interviewing him at the embassy.
"By revoking the arrest warrant, the District Court must compel the Prosecutor's Office to move the investigation forward in the only way possible," Samuelsson told the court during the hearing.
"(It must) arrange a questioning of Assange in London and then move the investigation forward, so we can finally come to a conclusion."
Assange had acknowledged that even if the Swedish prosecutors had decided to drop the case, it would only be one part of the legal battle keeping him marooned at the embassy.
"I still have the larger problem, which is that of the United States and its pending prosecution, and perhaps extradition warrant," he told reporters in a conference call in June.