A Brazilian court will consider a psychic's claim that the United States Government owes him a $US25 million reward for information he says he provided on the hiding place of ousted Iraqi leader Saddam Hussein.

Brazil's second-highest court, the Superior Court of Justice, ruled the Brazilian justice system could rule on the matter and told a court in the psychic's home state of Minas Gerais to judge the case.

The lower court had earlier told Jucelino Nobrega da Luz it could not take up his claim and it would have to be judged in the United States, but the higher tribunal ruled otherwise.

"The Minas Gerais court will work with the claim," a spokesman for the Superior Court of Justice said.

"Jucelino da Luz alleges that the US armed forces only found Saddam based on his letters that provided his exact location, the very hole where he was hiding in Iraq.

"So he filed a court case to claim the reward."

The US Government offered the award for Saddam in July 2003 after the US-led forces occupied the country. He was captured in December of the same year.

The court said Mr da Luz sent letters to the US Government from September 2001, describing Saddam's future hiding place - a tiny cellar at a farmhouse near Tikrit. He never received a reply.