A Tamil family from Biloela seeking asylum will be allowed to stay in Australia for another three months.

It comes as an appeal to overturn a government decision to ban the Murugappan family from reapplying for the visas was heard in the Federal Circuit Court.

But in a surprise backflip, the government has revealed Nades, Priya and daughter Kopika will be granted with new three-month bridging visas.

They will however expire 2 days before Christmas.