The ultimately unsuccessful legal challenge was brought by the Project for the Registration of Children as British Citizens (PRCBC) and a child, known as O, represented by Mishcon de Reya.

The administrative processing cost is around £372 per application, meaning the Home Office makes a profit of roughly £640 for the registration of each child.

The UKSC was presented with evidence that children like O of single parents on benefits cannot afford the fee. O is now 14 years old and does not have citizenship as a result of the fee.

Lawyers and campaigners have called on Westminster to intervene by limiting the fee to administrative costs or scrapping it altogether for children in care and those who cannot afford it.

Maria Patsalos, partner at Mishcon de Reya who acted for PRCBC, said: “This is a disappointing decision and will have a resounding detrimental impact on children. Over the last four years, it has been a privilege to have championed the rights of young people seeking fair and equitable access to British citizenship.

“Wealth should never be a barrier for these children to access their rights and we hope that Parliament takes the opportunity now to resolve this deeply unfair situation.”

Solange Valdez-Symonds, CEO at PRCBC, said: “It’s been more than two years since the High Court found that this huge fee has been depriving many children of their citizenship rights – causing them to feel alienated, excluded and isolated in their country of birth and home, often the only place they know.

“The Home Secretary has since done nothing to correct the appalling impact this fee has on young people.

“We are profoundly disappointed by today’s decision, but we remain determined to bring an end to this injustice and secure the rights of all children connected to the UK to have the citizenship that is their right by Act of Parliament.”

Amnesty International UK, which intervened in the Supreme Court proceedings on the position of stateless children born in the UK, whose statutory rights to citizenship are also made subject to payment of this fee, has backed a bid by Lords to reduce the fee through amendments to the Nationality and Borders Bill.

Steve Valdez-Symonds, Amnesty’s refugee and migrant rights director, said: “This fee deprives thousands of children of their citizenship rights, yet the Home Office has chosen to keep overcharging, despite the alienation and exclusion this is causing. We are calling on Parliament to bring an end to this once and for all by passing an amendment to the Nationality and Borders Bill.

“The Home Office is using the fact that some British children must formally register their citizenship to impose a tax that other British people do not have to pay – it is a form of exploitation though sadly one the Supreme Court has today ruled is permitted under current legislation.”