A Swedish court has upheld an arrest warrant against Julian Assange, dismissing a challenge by the Australian founder of the WikiLeaks website who is wanted for questioning by Swedish prosecutors in an investigation of alleged sex crimes.

The Svea appeals court upheld a decision by a lower court on Thursday saying there was no reason to lift the detention order just because it cannot be enforced at the moment.

"In the view of the Court of Appeal there is no reason to set aside the detention solely because Julian Assange is in an embassy and the detention order cannot be enforced at present for that reason,'' the court said in a statement.

"The fact is that Julian Assange can leave the embassy if he so wishes. This fact means that the restriction of his freedom cannot be equated with a deprivation of liberty."

The court said that "interviews must take place here in Sweden in view of the nature of the crimes and the investigation and the fact that a possible trial requires him to be in Sweden", dismissing Assange's claim that he is effectively under house arrest.

Assange's lawyers have argued that the detention order should be lifted, on the grounds that it cannot be enforced while he is at the embassy and because it is restricting on his civil rights.

No charges have yet been brought against Assange, 43, in Sweden but he is wanted for questioning by police over allegations of sexual misconduct and rape involving two women he met during a visit to the Scandinavian country in 2010.

A European arrest warrant has also been issued to support the Swedish move.

Assange, who has been holed up in the Ecuador embassy in London for two years, denies the allegations and has been fighting a legal battle against extradition since his arrest in Britain in December 2010.

The UK has refused to grant Assange safe passage out of the embassy so he can travel to Ecuador, despite Ecuador granting the Australian refugee status.

Assange fears extradition to Sweden could be a pretext for him to be transferred to the US to face trial over WikiLeaks' publication of classified US military and diplomatic documents.

Wikileaks leaked a vast trove of diplomatic cables and Iraq and Afghanistan war logs a few years ago.

Source: Agencies