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Gurkhas have lost a bid to overturn a ruling that stopped them automatically settling in the UK after leaving the Army. Skip related content

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Those who left the Army before 1997 were not given the right to automatically settle in the UK after four years' service.

Last year, a High Court judge ruled that the policy excluding older veterans was unlawful and in need of urgent review.

Instead of overturning the ruling, the Government has now decided to allow those soldiers who retired prior to July 1997 the automatic right to live in the UK - but only if special circumstances apply, such as they were injured or were awarded a medal for bravery.

Actress Joanna Lumley, who has backed the campaign, said: "The Gurkhas cannot meet these new criteria. "It makes me ashamed of our government. We will fight on. We don't stop. This has been a setback but that is all."

There are currently around 3,500 serving Gurkhas. More than 200,000 fought during the First and Second World Wars, with 43,000 giving their lives.

Ragprasad Purja, 43, served with the Gurkhas for 17 years. He said: "It is the saddest day for the Gurkhas and the saddest day for the British Government.

"I cannot believe that this Government made such a decision. I was proud of my service but now I am very sad."

David Enright, of Howe and Co solicitors, said: "They have set criteria that are unattainable.

"It's a sham and an absolute disgrace. It's far more restrictive than the old policy."

Prime Minister Gordon Brown said: "Anybody who has done 20 years service before 1997 is going to benefit from this decision. They can make the choice if they want to come to Britain.

"Anybody that has suffered injuries or who has got rewards for gallantry can also come to Britain."

Immigration Minister Phil Woolas said the changes will benefit around 4,300 more ex-Gurkhas out of a total of 36,000, who retired before 1997.

He said: "This guidance honours the service, commitment and gallantry of those who served with the Gurkhas brigade.

"Where there are strong reasons, there has been scope for Gurkhas who retired prior to July 1997 to apply to settle in the UK.

"In fact, because of rules brought in by the Government, we have already welcomed around 6,000 Gurkhas and family members to Britain.

"We will work with the Ministry of Defence to actively inform those who might be eligible in Nepal of these changes."

The Gurkha brigade was formed following the partition of India in 1947 but Nepalese Gurkha soldiers have been part of the British Army for almost 200 years.