Seven former Gurkha soldiers, who took the British government to court claiming they suffered 'inferior' pay, conditions and treatment to that of their British colleagues, lost their claim on Friday.

In the test cases, the Nepalese fighters claimed that the ministry of defence had breached their rights.

Prime Minister Tony Blair's wife, Cherie Booth QC, represented them at the two-day high court hearing.

Booth told Justice Sullivan there had been ‘systematic and institutionalised less favourable treatment of Gurkha soldiers... on the grounds of their race and nationality'.

"On the one hand, Gurkhas are acknowledged to be brave fighters who have provided loyal service to the Crown for nearly 200 years," she said. "On the other hand, they are treated as different and inferior in relation to other parts of the British Army on terms and conditions of service."

The MoD denied the charge and said that too much time had elapsed between the time the men were serving and the case being brought.

Delivering the judgment, Justice Sullivan said the differences in pay and pensions between the Gurkhas and British soldiers were not so great that they could be described as 'disproportionate or irrational'.

Gurkha pensions, he said, were twice the top rate of Indian Army pensions, with cost of living increases linked to those in Nepal, where the ex-soldiers had returned to live.

He said there were 'no winners' and hoped they would 'be able to resolve their outstanding differences in a spirit of co-operation rather than conflict'.

The Gurkhas were refused permission to appeal.

The seven, who had served in the Brigade of Gurkhas, were trying to claim £2 million in compensation and had their claim succeeded it could have opened floodgates to some 30,000 other former soldiers.