BARRY George, who spent eight years in prison after being wrongly convicted of the murder of TV presenter Jill Dando, has lost his High Court bid for compensation as a victim of a "miscarriage of justice".
Two judges rejected his claim that the Justice Secretary unfairly and unlawfully decided he was "not innocent enough to be compensated".
Lord Justice Beatson and Mr Justice Irwin ruled that the Secretary of State was "entirely justified in the conclusion he reached."
Mr George, who has family in Ireland including his Cork-based sister and Limerick-based uncle, was said to be "disappointed" with the result.
Ian Lawless, who spent eight years behind bars for murder before being freed by the Court of Appeal in 2009, won a similar legal challenge.
Mr Lawless was jailed for life in 2002 after confessing to the murder of retired sea captain Alf Wilkins on the Yarborough estate in Grimsby, Lincolnshire.
His conviction was later ruled unsafe after fresh medical evidence revealed he had a "pathological need for attention".
The judges ruled that in his case the decision to refuse compensation was legally flawed and must be reconsidered in the light of their judgment.
Mr George's solicitor, Nick Baird, said: "We are very disappointed with the judgment and we shall be applying for permission to leapfrog the Court of Appeal to have the matter heard before the Supreme Court."
Mr George, 52, came to court to seek a reconsideration of his case which could have opened the way for him to claim an award of up to £500,000 for lost earnings and wrongful imprisonment.
But the judges ruled that he had "failed the legal test" to receive an award.
Miss Dando was shot dead outside her home in Fulham in April 1999.
After his conviction in July 2001, Mr George, of Fulham, west London, was acquitted of killing the 37-year-old BBC presenter at a retrial in August 2008.
Today's high-profile compensation action was one of five test cases assembled to decide who is now entitled to payments in "miscarriage of justice" cases following a landmark decision by the Supreme Court in May 2011.
Decisions in all five cases to refuse payouts were defended by current Justice Secretary Chris Grayling in a three-day hearing last October.
Ian Glen QC, appearing for Mr George, had argued that the decision to refuse compensation was "defective and contrary to natural justice".
Despite Mr George's unanimous acquittal by a jury at his retrial, a Ministry of Justice "functionary" had unfairly and unlawfully decided he was "not innocent enough to be compensated".
Yet for more than 30 years those acquitted on retrials in similar circumstances had been compensated, said Mr Glen.
The position seemed to have changed in 2008, the year Mr George was acquitted, Mr Glen went on.
"We are not sure when the policy was changed or whether it was affected by the Barry George case."
Mr Glen said that not to treat Mr George's acquittal as a miscarriage of justice "went behind the decision of the jury that acquitted him" and failed to take account of the fact that no safe conviction could ever be based on the evidence against him.
The judges rejected his arguments, saying: "There was indeed a case upon which a reasonable jury, properly directed, could have convicted the claimant of murder."
Mr George's initial claim for compensation for lost earnings and wrongful imprisonment was rejected in January 2010.
His legal challenge against that decision was put on hold until after a panel of nine Supreme Court justices gave their landmark compensation ruling in the case of Andrew Adams - a former aircraft engineer who spent 14 years in jail before his murder conviction was ruled unsafe.
After the Adams ruling, Mr George was told by the Justice Secretary in June 2011 he was still not entitled to compensation under Section 133 of the Criminal Justice Act 1988.
Today the judges rejected Mr George's case along with three others. The only one to succeed was Mr Lawless.
Another 11 cases were awaiting today's landmark ruling.