Australian Guantanamo Bay prisoner David Hicks may be transferred home to serve out any sentence he receives, the government in Canberra has said.

Mr Hicks has been held at the US base in Cuba for four years, since he was captured in Afghanistan in late 2001.

The 30-year-old Muslim convert, often dubbed the "Australian Taleban", has been accused by the US of conspiracy to commit war crimes and aiding the enemy.

Mr Hicks has consistently denied the allegations against him.

Australia and the US signed the prisoner transfer agreement in Washington on Tuesday.

"Transfers would need the approval of the Australian and United States governments, and the transferee and would only be possible after the judgment of the military commission is final," Foreign Affairs Minister Alexander Downer and Attorney General Philip Ruddock said in a joint statement on Wednesday.

The jail term would be governed by Australian law, but would maintain the duration of the original sentence, the statement added.

British citizenship

The issue of transferring Mr Hicks may, however, be complicated by his attempt to gain British citizenship.

In an effort to secure his release from Guantanamo Bay, Mr Hicks, whose mother was born in the UK, decided to seek British citizenship because London had successfully lobbied for the release of all its citizens held at Guantanamo Bay.

Australia, in contrast, says the system of trial by a US military commission is fair, and has refused to seek Mr Hicks' repatriation.

Last month Mr Hicks won a landmark legal victory allowing him to claim British citizenship, but the British government could still appeal to the House of Lords against that decision.

PHOTO CAPTION

Australia's David Hicks poses with his daughter in this undated handout photo. (Reuters)