VIENNA, Austria (Reuters) -An Austrian court said on Tuesday it had ruled that the country's most infamous living criminal, incestuous rapist Josef Fritzl, could be transferred to a regular prison from a prison psychiatric unit but release from incarceration was unlikely.

Fritzl, who has now changed his name, raped his daughter whom he held captive for 24 years in a dungeon he built under his home, fathering seven children over the period.

The 89-year-old has been serving a life sentence in a prison unit for "mentally abnormal" inmates since his conviction in 2009 for incest, rape, enslavement, coercion and the murder by neglect of one of the children, a newborn boy.

While a transfer could, in principle, pave the way for Fritzl's conditional release from prison altogether, the court has said such a request was unlikely to be approved due to "special preventive reasons."

Fritzl's lawyer Astrid Wagner has said she would apply for such a release within a year of his transfer.

"He no longer poses a threat that requires being held in a forensic-therapeutic centre," the court said, using a more recent term for where he is being detained. It cited his advancing dementia and frailty as factors.

"In the same decision, the three-judge panel also ruled that a conditional release from regular custody, i.e. being freed, is not possible for special preventive reasons," the statement said, referring to the "unprecedented criminal energy" he used.

It was, therefore, not to be expected that he would be released altogether, the statement said.

At a hearing in a courthouse in the town of Krems an der Donau near Vienna in January, the court allowed Fritzl's transfer, only for a higher court to overturn that decision in March, ruling that "the facts necessary for such a conditional release had not yet fully been established".

It sent the case back to the first court, ordering it to gain a fuller picture of Fritzl's suitability for a transfer.

The first court held a hearing last month inside the prison where Fritzl is detained. Prosecutors can still file a complaint against the decision to move him to a regular prison in a bid to get it overturned, as they did after the first ruling.

(Reporting by Francois Murphy; Editing by Andrew Heavens and Bernadette Baum)