LONDON (REUTERS) - A New Zealand man convicted of murdering his wife and daughter in a case that has gripped the island nation for over a decade must stand trial again in light of new evidence, a British court ruled on Monday.

Mark Lundy is serving a sentence of life in jail in New Zealand for the murder of his wife Christine and seven-year-old daughter Amber, who were found hacked to death in the family home in the city of Palmerston North in August 2000.

A New Zealand court rejected his appeal against conviction in 2002, and in 2012 Lundy challenged that ruling before Britain's Judicial Committee of the Privy Council, a court with ties to New Zealand dating back to colonial times.

A panel of five Privy Council judges ruled unanimously on Monday that Lundy's convictions should be quashed and he should stand trial again in New Zealand as soon as possible. In the meantime, he should remain in custody, it said.

The ruling is binding on New Zealand authorities.

New Zealand Prime Minister John Key, asked about the case during a visit to Bali, said he was "not entirely surprised" by the British ruling and that the case would go back to New Zealand's High Court for a retrial, news website stuff.co.nz reported.

A new trial is sure to make headlines in New Zealand, where the twists and turns of the case have been closely followed since Christine's body was discovered in the marital bed and Amber's was found in the doorway of her parents' bedroom.

The Privy Council ruling hinged on whether Lundy should be allowed to introduce new evidence into the case. The judges did not express a view on Lundy's guilt or innocence but said the new evidence was credible and should be tested at trial.

On the night of the murders, Lundy, a kitchenware salesman, was staying in Petone, about 145km south of Palmerston North.

Based on records of telephone calls he made from Petone and on a scientific estimate of the time when the victims died, the prosecution's case was that Lundy made the 290km round trip and carried out the murders in the space of less than three hours.

"The new evidence, if accepted, directly challenges the plausibility of that case," the British judges wrote.

"It has an obvious and significant potential impact on the safety of the conviction and the possibility of a miscarriage of justice. It is in the interests of justice that it be admitted."

As there were no witnesses to the murder, the prosecution relied largely on scientific evidence. The new, also scientific, evidence put forward by Lundy challenges the prosecution case on three key elements including the time of the victims' death and tissue found on Lundy's clothing that was said to be from his wife's central nervous system.

This is likely to be one of the last New Zealand cases to be heard by the Judicial Committee of the Privy Council, which had jurisdiction to hear appeals against decisions made by the New Zealand Court of Appeal before January 2004.

The law has now changed, and rulings from after that date can only be challenged in New Zealand's own Supreme Court.