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The decision to refuse compensation was "defective and contrary to natural justice", according to Ian Glen QC, who was representing Barry George.
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".
Mr Glen said that for more than 30 years those acquitted on retrials in similar circumstances had been compensated.
He said: "We are not sure when the policy was changed or whether it was affected by the Barry George case."
The position seemed to have changed in 2008, the year Mr George was acquitted, Mr Glen added.
Barry George's solicitor, Nick Baird, said: "We are very disappointed with the judgement 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.
Two judges have rejected Barry George's 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."
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.
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".
- 26 April 1999 – Jill Dando is fatally shot outside her home in Fulham in south west London
- 25 May 2000 – Police arrest 40 year old Barry George on suspicion of murder and he is charged 4 days later
- 26 February 2001 – The trial of Barry George begins. He denies murder
- 2 July 2001 – The accused is found guilty and convicted of Jill Dando’s murder. He is sentenced to life in prison
- 1 August 2008 – Barry George is found not guilty of Jill Dando’s murder following a retrial
Barry George, who spent eight years in prison after being wrongly convicted of the murder of TV presenter Jill Dando, will learn today whether he has won a High Court battle for compensation as a victim of a "miscarriage of justice".
Read more on ITV News London.