Former MP Phil Woolas has lost in his bid for a judicial review of the decision which stripped him of his Oldham seat.
A special election court found that Mr Woolas knowingly promoted misleading statements in his election literature about Liberal Democrat opponent Elwyn Watkins.
The former immigration minister received backing and funds from Labour MPs, angry at his immediate disowning by the party leadership, to launch his judicial review of the decision.
The support raised Mr Woolas' hopes that he might avoid his banishment from the world of politics by arguing that the election court's interpretation of the law was mistaken and damaged commitments to freedom of speech.
But it has been confirmed this afternoon that Mr Woolas has lost his prolonged legal battle. The decision to strip him of his seat has been upheld by three high court judges.
The judgment found that two of the three leaflets in question "had gone beyond being a statement in relation to Mr Watkins' political position in relation to wooing extremist voters to being a statement in relation to his personal character".
Mr Woolas responded: "It is obviously a very serious concern that my voters who have elected me four times have not been given the right to judge this matter for themselves as I am barred from standing for parliament for three years."
He also implied that he would not mount a further legal challenge in an appeal process, stating: "That is the end, I am out."
Ed Miliband faced criticism for appointing Mr Woolas as a shadow minister despite the ongoing court proceedings against him, but acted ruthlessly when the special election court made its decision known in November.
A Labour spokesman responded to today's ruling stating: "Following the conclusion of this judicial review, the Labour party will consider this issue in detail and whether further action is appropriate."
Mr Woolas won in May by just 103 votes.
As it stands, Mr Woolas' seat has no MP as he has been prohibited from standing for office for three years.
Unless Mr Woolas appeals, there will be a by-election in his Oldham East and Saddleworth seat. Speaker John Bercow will now "study the judgement" before proceeding to the next step setting up the possible contest.
Lib Dem Mr Watkins commented on the ruling at the Royal Courts of Justice, saying: "This judgment makes it clear once again that if you knowingly lie in your election campaign and deceive your constituents you should be kicked out of parliament.
"Now it is time to move on and for the by-election to take place. The people of Oldham East and Saddleworth have been without an MP for long enough. They need to be able to choose a new member of parliament as soon as possible."
It would be the first contest for a Westminster seat since the election and a keen test of how the coalition will manage parliamentary campaigns against each other in the future.
It may also reveal the extent of the apparent backlash against the Liberal Democrats, whose polling fortunes continue to hover at a nadir of around ten per cent.