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.
More top news
Staying blustery for the next 24 hours with strong winds driving some rain, sleet and snow from west to east tonight.
The mother of murdered Boris Nemstov's girlfriend is worried her daughter is being treated as if she had something to do with the killing.
Student Charlie Mann was jailed for 16 months for the attack on his mother at their family home while high on Meow Meow.