HOUSTON, Feb 21 (Reuters) - A U.S. judge in El Paso on Wednesday dismissed demands that U.S. immigration authorities release an anti-Fidel Castro militant accused of bombing a Cuban airliner in 1976.

The decision had been expected since Luis Posada Carriles was indicted Jan. 11 on criminal charges he lied to immigration officials. He is no longer in immigration custody pending deportation, but is in jail awaiting trial.

"The court finds that it cannot grant petitioner his requested relief as petitioner is no longer in the custody of the Department of Homeland Security," U.S. District Judge Philip Martinez of El Paso wrote.

The case has become a cause celebre pitting anti-Castro Cuban Americans who consider Posada, 78, a freedom fighter, against Cuba and Venezuela, who have demanded his extradition as a terrorist.

The case is embarrassing to the U.S. government, engaged in a war on terror, because Posada, who for years worked against Castro, was at one time in the pay of the CIA.

Cuba and Venezuela argue Posada must be turned over to face charges in the airliner bombing, in which 73 people died, but U.S. officials have refused, arguing he might be tortured.

At the same time, the United States has refused to allow Posada, who sneaked into the country in 2005, to join relatives in Miami, Florida. He has said he has renounced violence and only wants to be with his family.

The United States has not been able to find another country willing to accept Posada's deportation, and a judge said in November he either had to be charged with something by Feb. 1 or released.

U.S. officials had resisted either course until recently.

An indictment returned by a grand jury in El Paso on Jan. 11 accused Posada of lying about how he entered the United States and making false claims on a naturalization application. He could face 40 years in prison if convicted.

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