Kayn Adam Charles Wells, 43, on Wednesday received the ultimatum at Caboolture Magistrates Court after requesting removal from the country, catching prosecutors off-guard.
The Briton can't be prosecuted if removed from the country.
His matter was adjourned for hours as his bail was varied to require him to rescind the application requesting removal from Australia and inform Border Force by close of business on Wednesday.
"If bail is not signed, the person is in the custody of the court and no longer in the custody of Border Force and then would be detained in a Queensland correctional facility," Magistrate Robert Walker said.
Wells was arrested at Caboolture, north of Brisbane, in November following an Australian Federal Police national security investigation.
He was charged with displaying Nazi symbols and posting harmful content on the social media site X, formerly Twitter, and granted bail.
Federal police allegedly also found several weapons "including swords bearing swastika symbology, axes and knives" in Wells' possession.
Home Affairs Minister Tony Burke cancelled Wells' visa on December 22 and he was taken into immigration detention, facing deportation after living in Australia for the past 15 years.
"He came here to hate - he doesn't get to stay," Mr Burke told the ABC in December.
Wells signed a Border Force form requesting voluntary removal on Tuesday, a day before he faced Caboolture court.
Prosecutors only found out about Wells' application an hour before court started on Wednesday, Mr Walker heard.
Commonwealth prosecutor Annabelle Bridgland sought to vary bail to include the condition Wells not seek voluntary removal.
"Obviously the purpose of his bail is to keep him in Australia for the purposes of his prosecution," she said.
Hours later, Ms Bridgland returned to court with a written application to vary Wells' bail.
Mr Walker heard prosecutors had planned to vary Wells' bail once his visa was revoked and were told he would not seek voluntary removal.
"Unfortunately this matter is a victim of the timing. The court break and the Christmas break has had a little to do with how this case unfolded," Ms Bridgland said.
But Wells would oppose varying his bail and rescinding his application for removal from Australia, Mr Walker heard.
"It was only when Border Force presented him with that application that he then decided to make that application," his Legal Aid solicitor Bree-Anna Bowtell said.
"Home Affairs can refuse that application. It is not a decision for the court to make him abandon an application that was lawful at the time."
The Immigration Act did not give Home Affairs the discretion to refuse an application for voluntary removal, Mr Walker said.
Wells then received his ultimatum from Mr Walker.
The case was adjourned to February 18, with Wells left to decide whether to sign his new bail conditions and be returned to Border Force custody.
He had been spending his time in immigration detention in a Brisbane hotel.
Two family members attended on Wednesday in a show of support but said outside court they did not know what decision Wells would make.
He was arrested as police cracked down on the use of prohibited symbols to combat anti-Semitism.
There was a renewed focus on neo-Nazis following an anti-Semitic protest outside NSW parliament in November that resulted in the home affairs minister cancelling the visa of Matthew Gruter, who had come to Australia from South Africa.
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