Lisbon's appeals court on Thursday refused to extradite a convicted US murderer who was arrested in September after 41 years on the run on the grounds that he was now Portuguese, his lawyer said.

"The Lisbon appeals court ruled that he had Portuguese citizenship and will not be extradited," George Wright's lawyer Manuel Luis Ferreira told AFP.

The 68-year-old Wright, convicted of a 1962 murder in a US court, was arrested on September 26 in Portugal, where he has been living for 20 years under the name of Jose Luis Jorge dos Santos, married with two sons now aged 25 and 26.

"He is now free," the lawyer said of Wright, who had been held under house arrest pending the court's ruling on a US bid to have him extradited.

The decision could be appealed in a higher court, but only if an individual or institution petitions as a civil party, the Lusa news agency said, citing a juridical source.

The US embassy condemned the decision in a statement and said it planned to fully study the ruling and work with the Portuguese authorities to find "a solution to return Mr. Wright to the United States".

Speaking to journalists from his lawyer's office, Wright, who asked to be referred to by his adopted name, applauded the court's ruling.

"I am very pleased and I want to thank the Portuguese courts for having made the right decision", he said, adding that he has a "clear conscience".

"These things belong in the past. I am no longer the person I was back then".

The US Federal Bureau of Investigation had been searching for him since his August 1970 escape from Bayside State Prison in New Jersey, where he was jailed for a 1962 murder.

For two years, Wright disappeared into the Black Liberation Army, a violent group of African American communists.

Then on July 31, 1972, he was among five adults who hijacked a Delta flight flying from Detroit to Miami.

They demanded a one-million-dollar ransom for the passengers and when this was paid, they forced the plane to fly to Boston where it refuelled and took on another pilot hostage, then crossed the Atlantic to Algeria.

The hijackers sought asylum there. Although the plane and money were seized by the Algerians and returned to the United States, the hijackers were only briefly detained.

In May 1976 French police captured four of the gang -- but not Wright.

"We are extremely disappointed by the decision of the appeals court in Lisbon", the US embassy statement said.

"George Wright is a convicted murderer, guilty of a very serious crime that is absolutely covered under the terms of our extradition treaty with Portugal", it further said.