A Vienna court said on Monday it has overturned a decision to transfer incest rapist Josef Fritzl from a special psychiatric unit to a regular jail, ordering the case back to the lower court.

Fritzl, 88, repeatedly raped his daughter he locked in a cellar for over 24 years, fathering seven children with her.

In 2009, Fritzl was jailed for life for the murder by neglect of a new-born baby he fathered with his daughter Elisabeth while holding her in the specially-built basement of his house.

He was also found guilty of incest, sequestration, grievous assault and 3,000 instances of rape.

In late January, the Krems regional court approved Fritzl's application to be moved to a regular jail – the first step to eventually seeking a release – but prosecutors appealed against the decision.

"Contrary to the (assessment by the) court of first instance, the Vienna Higher Provincial Court came to the conclusion that the facts necessary for such a conditional release had not yet fully been clarified," the Vienna court said in a statement.

The Vienna court requested the lower Krems court to take more evidence before ruling again on Fritzl's application to be transferred to a regular jail.

A new court hearing in Krems is scheduled for the end of April, Fritzl's lawyer Astrid Wagner said.

Further medical examinations including brain scans would be conducted in the coming weeks, Wagner said, slamming prosecutors for "unnecessarily delaying the procedure."

Fritzl has been held in a jail for people with mental illnesses who pose a high degree of danger in Krems, some 80 kilometres northwest of Vienna. (AFP)