In an interview on Arabic radio reported in The Australian, the sheikh called militant jihadists men of the highest order for fighting coalition forces -- which include Australian forces -- to liberate their homelands.
"Jihad of the liberator of Palestine, that's the greatest and cleanest and highest ... jihad which lifts our heads in pride in south Lebanon," the sheikh said in the October 17 interview.
He told broadcaster Abrahim Zoabi he endorses jihad for liberation. "We are talking about ... jihad of liberating our land, jihad of Muslim Afghanis in their land -- that's jihad.
"Jihad of Iraqi Muslims is jihad, but not when Sunnis and Shias are killing each other -- that's not jihad."
Five-point plan
The latest comments have been revealed as the Lebanese Muslim Association decided on a new five-point plan to deal with the crisis over the Mufti’s comments.
"The board has met. We have put together a plan and hopefully we can get ourselves out of this crisis," said LMA president Tom Zreika.
But he declined to reveal the plan, saying it was confidential.
A defiant Sheikh Elhilali said on Friday he would resign only when the world was "clean of the White House".
Extremist links
Meanwhile, it was revealed intelligence reports warning that
Sheikh Elhilali had been linked to extremist groups in Egypt and could pose a threat to Australia were sent to the federal government in 1984 -- six years before he was granted permanent residency.
But the documents, which also said military-style weapons were being kept at the Lakemba mosque, were shelved, according to the secret agent who passed them on to Canberra.
The reports came from an Egyptian source considered highly reliable by Western intelligence agencies, including the CIA.
"He was our best agent at the time," the former secret agent told The Australian.
The reports were passed on through the Australian embassy in
Cairo then headed by Ken Rogers.
Current ASIO director General Paul O'Sullivan was a senior diplomat at the embassy at the time.