Brandon Lewis was granted leave to seek a judicial review of the decision to free Robert James Clarke under the terms of the Good Friday Agreement.
In 2011 Clarke (69) received a minimum 25-year prison term after being found guilty of killing Alfredo Fusco at his north Belfast cafe in February 1973.
But he is understood to have only served two years behind bars for the murder due to the scheme covering the early release of those convicted of “scheduled” terrorist crimes pre-dating the April 1998 peace accord.
Lawyers for the Secretary of State are now challenging the Sentence Review Commissioners over the step taken under provisions within the Northern Ireland (Sentences) Act) 1998.
They contend that Clarke had been ineligible for release on licence because it was not a qualifying scheduled offence at the time of commission.
In court today Tony McGleenan QC, representing the Secretary of State, argued that the legal test for securing a full judicial review hearing had been met.
Proceedings have been brought amid controversial new legislation introduced by the government to deal with the legacy of the Troubles in Northern Ireland,
Those proposals are believed to include a clause which could close any loophole to Clarke’s eligibility.
“In one sense it creates a sense of urgency in this application, but also clearly could have a bearing on the ultimate outcome of what happens here,” Mr McGleenan acknowledged.
He also confirmed that relatives of the murder victim have been kept fully informed about the legal challenge.
Peter Coll QC, for the Sentence Review Commissioners, did not oppose the application for leave to seek a judicial review.
But Clarke’s barrister, Ronan Lavery QC, raised issues about the delay in taking the case years after his release from jail.
“Our client shouldn’t have to endure these proceedings when his liberty is at stake and faces the prospect of going back to prison,” he said.
Following submissions, Mr Justice Scoffield ruled that the challenge should proceed.
“Taking into account in particular the public interest… the best course of action is simply for me to grant leave on the basis I’m satisfied there is an arguable case with a reasonable prospect of success,” the judge held.
“I recognise that delay is a live and very important issue; the grant of leave should not be taken to be any indication of how the court might deal with that.”
A full hearing will now take place in October.
Mr Fusco, 56, was chased into a storage area of the York Road premises by one of two intruders armed with a machine gun.
When the weapon jammed the killer went back out to his accomplice and swapped guns, using a revolver to shoot the victim as he tried to barricade himself in.
The case was reopened by the Historical Enquiries Team after new fingerprint technology allowed them to identify Clarke as the gunman who left his prints on Mr Fusco's cafe door.
Clarke, formerly of Dundrod Road, Nutts Corner, has also served a separate 16-year term in jail for another sectarian murder.
North Belfast woman Margaret O'Neill, 58, was killed in a drive-by shooting in June 1975.