Co Louth man Liam Campbell must now remain in custody until extradition proceedings against him are completed, the High Court has ruled.
The court held that the risk of flight remains too great while authorities in the Baltic state continue with attempts to have him stand trial for alleged terrorist-related offences.
Campbell, from Upper Faughart, Dundalk, is wanted in Lithuania over claims that he was part of an operation to smuggle guns, ammunition and explosives into Ireland for dissident republicans.
Last week, a judge in Belfast refused to order his extradition because he was likely to be held in inhuman and degrading conditions. A challenge to that decision is due to be heard next week.
Campbell was granted bail on Thursday under tight conditions, including a requirement that a £75,000 cash surety is lodged in court. But lawyers for the Lithuanian authorities appealed his release in the High Court by claiming he may flee.
Details were disclosed of a passport having been issued in the name of John Campbell, but containing Liam Campbell's photo.
The wanted man denies applying for it or knowing anything about it.
It was also claimed in court that two men prepared to act as sureties for Campbell have "a long history of involvement with terrorist groups".
Lord Chief Justice Sir Declan Morgan and Lord Justice Higgins were told the allegation was based on intelligence rather than any proof of convictions.
Defence barrister Sean Devine argued that both men were just neighbours of the Campbell family prepared to put up their life savings. He argued that it would make no sense for his client to flee across the border where he would be liable to similar extradition proceedings.
Campbell has been in prison since he was arrested after crossing the border into south Armagh in May 2009.
A month later he was found liable, along with convicted Real IRA leader Michael McKevitt, for the Omagh bombing following a landmark civil action brought by relatives of some of the 29 people killed in the August 1998 atrocity.
The judge in that case held there was cogent evidence that Campbell was a member of the Real IRA's Army Council.
But in court on Friday his lawyer claimed he has no links to any factions in prison.
"For more than three years he's been held in isolation," Mr Devine said. "That's because he doesn't align himself with any dissident groupings within the prison."
He further contended that any trial against Campbell should be in the UK rather than Lithuania.
"The main witnesses in this case are British military intelligence agents who are from here," he said. "The most appropriate forums are here, but the authorities have deliberately forum-shopped a regime that offers less protection of the fundamental rights of a fair trial."
Ruling on the challenge against bail, Sir Declan pointed out that the false passport could only possibly have been used by Campbell, even if he had nothing to do with obtaining it.