Their lawyers asked the High Court to declare their detention unconstitutional and told the hearing the Federal Government did not have the power to hold the children.
But in a unanimous decision, the court found that while Australia may be in breach of international conventions, Parliament did have the right to make laws to detain children.
Outside court, lawyer Eric Vadarlis said he was amazed by the court's view.
"We're very disappointed that they've applied it in this way," he said.
"We felt otherwise but you can't argue with a 7-0 majority."
This is the second time the High Court has dismissed a challenge to the detention of children.
By In Solidarity 7 October 04
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