A Swedish court ruled on Wednesday after a public hearing to uphold the arrest warrant against Julian Assange, the WikiLeaks founder, who has stayed in Ecuador's embassy in London for two years to avoid extradition over allegations of rape and sexual molestation.

Judge Lena Egelin said that Assange is still suspected, with probable cause, of sex crimes, and therefore, his detention order remains in place.

"He has chosen himself to go into the embassy and the court does not believe that the deprivation of his liberty is such as to be disproportionate" to the allegations, said Egelin in a statement to the court.

The judge also said that the decision could be appealed.

After the ruling, Assange's lawyers made it clear that they would appeal Wednesday's court verdict.

"It took two hours today for the judge to rule, so it must have been a difficult decision," Thomas Olsson, Assange's lawyer, was quoted by The Guardian as saying.

"We are confident and have strong legal arguments to get the decision overruled in the Court of Appeal, " said Olsson.

Kristinn Hrafnsson, a WikiLeaks spokesman, was quoted by CNN after the court's verdict as saying, "I had been moderately hopeful, but this didn't come as a surprise."

"Now we will appeal and we hope the higher court will reconsider all the solid arguments we have presented. This has to come to an end," said Hrafnsson.

Previous expectations that court canceling the arrest warrant would mean an immediate cancellation of the warrant within the European Union (EU). But given Wednesday's ruling, Assange is expected to remain in the Ecuadorian embassy in London.

Outside the Ecuadorian embassy in London, supporters for Assange holding placards that read "End the witch hunt, Free Assange!" and "No Charges!" felt rather disappointed to the ruling.

"Americans are pulling the strings, so this is no surprise to me. The Americans want him and that's that. They are all in this together," Lance Rolls, 51, quoted by the Guardian.

In August 2010, the two young women Assange met and slept with in Stockholm later accused him of rape and sexual assault.

Assange said the allegations "at this moment is deeply disturbing", during the time when he feared that U.S. authorities' backlash over the leak of hundreds of thousands of military logs from Iraq and Afghanistan and diplomatic cables from U.S. embassies across the globe.

"The fear here was not about Sweden but that Sweden was going to be a place that would extradite him to the U.S.," Assange's U.S. lawyer Michael Ratner told The Guardian earlier.

"Until we can get an assurance from the U.S. government of non-prosecution, leaving the Ecuadorian embassy would be a very high risk move," said Ratner.

Stockholm District Court held the public hearing on Wednesday to determine if the arrest warrant for Assange for alleged sexual assault should be dropped.

This is the first formal legal discussion of the case since Assange sought asylum in the Ecuadorian embassy in London two years ago.