The father of a Down's syndrome baby at the centre of a surrogacy scandal did not abandon him in Thailand and can keep his twin sister despite being a convicted paedophile, a court ruled Thursday.

Australian couple David Farnell and Wenyu Li sparked international furore in 2014 when they were accused of leaving baby Gammy in Thailand and returning home with his healthy twin sister Pipah.

Thai surrogate Pattaramon Chanbua, who gave birth to the siblings, tried to get Pipah back the following year after learning Farnell was a convicted child sex offender.

But the Family Court of Western Australia ruled that Pipah could continue to live with the Farnells in the western city of Bunbury.

"I have decided Pipah should not be removed from the only family she has ever known, in order to be placed with people who would be total strangers to her," Chief Judge Stephen Thackray wrote in a 272-page decision.

Thackray said he did not think the child was at risk from her biological father, and pointed to the "strong attachments that Pipah has now formed with the Farnells".

"I have accepted the expert evidence that while there is a low risk of harm if Pipah stays in that home, there is a high risk of harm if she were removed," he said.

The conditions attached to the two-year-old's stay in Australia included Farnell not being left alone with Pipah and the couple always keeping Western Australia's Department for Child Protection informed of their address.

The judge also found that Gammy, who he said appeared to be "thriving" in his Thai home, was not abandoned by the Farnells, but rather Pattaramon wanted to keep him.

Pattaramon claimed in 2014 that the Farnells at first requested an abortion and then walked away when they learnt of his condition.

The judge added that the couple was not seeking access to a trust fund, set up from public donations to help Gammy, for Pipah's welfare needs or to meet their legal costs.

While family court proceedings are not usually published, Thackray said he had made his judgement available as it was in the public interest.

He also said the case "serves to highlight the dilemmas that arise when the reproductive capacities of women are turned into saleable commodities, with all the usual fallout when contracts go wrong".

Pattaramon told AFP she did not want to comment "because I don't know the details (of the court decision)".

Commercial surrogacy is illegal in Australia, prompting growing numbers of infertile couples to head overseas.

Debate over the legal and moral issues raised by Gammy saw Thailand pass a law last year banning foreign couples from using Thai women as surrogates.