Gurkhas are renowned for their bravery

In the test cases, the Nepalese fighters claimed their human rights had been breached by the "irrational and discriminatory" attitude of the Ministry of Defence.

The Gurkhas were represented at the two-day High Court hearing by the prime minister's wife Cherie Booth QC.

But the MoD argued there had been no breach of human rights laws, and that too much time had elapsed between the time the men were serving and the case being brought.

During the case, Ms Booth told Mr Justice Sullivan there had been "systematic and institutionalised less favourable treatment of Gurkha soldiers... on the grounds of their race and nationality".

'Brave fighters'

"On the one hand Gurkhas are acknowledged to be brave fighters who have provided loyal service to the Crown for nearly 200 years... and even today serve in Kuwait," she said.

Better to die than be a coward Who are the Gurkhas?

"But 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."

Mr Justice Sullivan said the differences in pay and pensions between 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.

In his judgement, he said there "were no winners" and he 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.

Victoria Crosses

The seven all retired in the past couple of years from the Brigade of Gurkhas, to which all the Gurkhas in the British Army are recruited.

Test case Gurkhas Rag Prasad Purja Ram Kaji Rai Yambahadur Gurung Nardev Pun Lal Bahadur Limbu Gopi Raj Lama Chandra Bahadur Pun

They had been trying to claim �2m in compensation and had their claim succeeded it could have opened the floodgates to some 30,000 other former soldiers.

The Gurkhas are thought of as one as the most fearsome fighting forces in the British army.

Drawn from the tiny mountainous country of Nepal, they still carry their traditional weapon, the kukri knife.