Lewis Moonie announced the compensation scheme in 2000

Hong Kong-born Diana Elias, who at 17 was sent to a Tenko-style camp there, was denied compensation as she had no "ancestral connection" to the UK.

Mrs Elias's lawyers says Ministry of Defence eligibility rules are racist.

But the MoD insists that only UK-born civilian detainees or those with British parents qualify for the scheme.

'Bloodlink'

Although Mrs Elias was born in the British Empire, the fact that her parents were Indian and Iraqi disqualified her from the compensation scheme.

Mrs Elias's lawyers contend that the scheme wrongly rejects applicants who lack a "bloodlink" to the UK, as the bar applies even in cases where they were imprisoned because they were British.

Mrs Elias, who now lives in Palmers Green, north London, was arrested in Hong Kong's Stanley Camp after the fall of the colony in 1941.

She was held in the camp along with her family for four years until liberation in 1945.

The camp included people who were excluded from the British evacuation plans, including British subjects not of European descent.

I am still British now, but I have been told I am not quite British enough for my suffering to be recognised Diana Elias

In November 2000, the then defence minister Lewis Moonie announced a compensation scheme for all surviving "British groups", intended to recognise the "debt of honour" the nation owed to them.

It makes a payment of �10,000 to individuals held by the Japanese or the surviving spouses of those who have died.

The 81-year-old's lawyers says the government has failed to honour a new legal obligation - introduced after the Stephen Lawrence Inquiry - to monitor and operate all of its policies in a way that promotes racial equality.

Mrs Elias, whose case is the first judicial review to be based on this duty, said: "We were British and because we were British the Japanese invaded our home, seized our possessions and interned us.

Thousands of prisoners were kept in terrible conditions

"When the compensation scheme was announced I applied because it was a scheme for British people.

"I am still British now, but I have been told I am not quite British enough for my suffering to be recognised. The `bloodlink' rule disgusts me.

"I have written to everyone from the Queen to the Prime Minister about it and they all pass the buck to the Ministry of Defence.

"Its officials have refused me compensation because of this racist rule."

This had "added insult to the injuries my family and I suffered during the war", she said.

Birthlink

Mrs Elias's solicitor, John Halford, said nothing could be more dishonourable than excluding British people from the scheme on racial grounds.

"This is nothing short of six decades of institutionalised discrimination and we will ask the court to put an end to it once and for all."

But the MoD said the compensation scheme was intended for those with a close link with the UK at the time of captivity.

"For former prisoners of war this link is demonstrated by their membership of our Armed Forces (for merchant seamen it is service in British ships).

"For civilian internees, they had to be British subjects at the time who were born or had a parent or grandparent born in the UK.