Duffy's legal challenge has already been rejected by domestic courts but Strasbourg officials accepted the case last month, prior to his recent arrest.
The Government will now have to respond to the claim his rights were breached, before judges decide whether to hold a full hearing.
If Duffy's Strasbourg case succeeds it could force the Government to amend the Terrorism Act 2000, which sets out how long terror suspects can be held by the police - an issue which attracted controversy when Labour attempted to raise the maximum pre-charge detention limit to 90 days.
It comes after The Sunday Telegraph disclosed in August how two al-Qaeda terrorists, one of whom plotted to kill thousands of people in a bomb attack on a British shopping centre, have also launched a human rights claim at Strasbourg in a bid to quash their convictions.
Last night a leading barrister said it would be unacceptable for the case to create years of uncertainly over terrorism laws while it the case was under consideration in Strasbourg.
Lord Carlile of Berriew QC, who until last year served as the government's independent reviewer of terrorism legislation, said: "This is exactly the sort of issue that should be decided by the domestic courts. I would not regard it as acceptable for this issue to linger for years in the European Court of Human Rights."
Duffy has been cleared of five murders of police and British troops in Northern Ireland over the last 17 years.
He was jailed for life in 1995 for shooting dead a former Ulster Defence Regiment soldier, John Lyness, but the conviction was overturned at the Court of Appeal the following year.
In 1997, he was charged with murdering two Royal Ulster Constabulary constables in Lurgan town centre, but the charges were later dropped.
Earlier this year Duffy was acquitted of murdering Sappers Patrick Azimkar, 21, and Mark Quinsey, 23, outside the Massereene barracks in Antrim.
The soldiers, who were due to fly out to Afghanistan the following day, were gunned down in a 30-second hail of gunfire as they collected pizza from delivery drivers outside the barracks on March 7, 2009.
More than 60 shots were fired and after the initial burst of automatic fire the gunmen walked over to the wounded soldiers and fired at close range.
The shootings shook the fragile peace process in Ulster and were the first British military fatalities in Northern Ireland since Lance Bombardier Stephen Restorick was shot dead by the Provisional IRA in 1997.
A Dublin-based newspaper received a telephone call using a recognised Real IRA code word claiming responsibility for the shootings.
A week later Duffy was arrested under the Terrorism Act. His detention was twice extended by the courts while forensics analysis was carried out.
In his trial last year, before a judge sitting without a jury, Antrim Crown Court heard Duffy's DNA matched that found on a seat belt buckle and on the tip of a latex glove discovered inside a burnt-out Vauxhall Cavalier used by the killers to flee the murder scene.
Mr Justice Anthony Hart said he was satisfied the DNA had been found in the car but said the prosecution had failed to link the defendant to the murders. Duffy was freed from court, sporting a thick beard acquired while on a no-wash dirty protest in Maghaberry prison.
Brian Shivers, 46, his co-defendant, was found guilty and jailed for life.
Another man, Gabriel Magee, who was arrested and questioned about the Massereene shootings but never charged, is bringing an almost identical case in Strasbourg.
Their lawyers claim that under the Terrorism Act suspects detained for questioning have "fewer rights than a person against whom charges had been brought".
Patrick Mercer, a Conservative MP who as an infantry officer completed nine tours of duty in Northern Ireland, said: "The 14 days' detention rules have been scrutinised time and again by British Members of Parliament to deal with British subjects.
"I really do not see why Strasbourg judges have any bearing on the way we handle our suspected terrorists."
Mr Grayling has promised to go into the next general election with a "very clear plan" regarding how a Conservative government would approach the EU and the Strasbourg court.
Geraldine and Mehmet Azimkar, the parents of Patrick, said in a statement: "What right does the court at Strasbourg have to overrule the British courts when it is so far removed from the issues that it is supposed to be judging upon?
"Their consideration seems always to be focused on the human rights of the criminals and terrorists?
"But what about Patrick's human right? His young and beautiful life was stolen from him at just 21. What abou
t ours? Our hearts and lives are broken without him."
