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Inhabitants of a so-called 'democracy village' camped out in Parliament Square have failed to overturn an eviction notice at the Court of Appeal.
The unsightly protest has been in place for several weeks.
Two weeks ago Mayor of London Boris Johnson won the backing of a court to evict them.
Mr Justice Griffith Williams said the Greater London Authority and the Mayor were being prevented from exercising their necessary powers of control management and care of Parliament Square Gardens.
A spokesman for the Mayor said the "scale and impact of the protest, which has gone on since May 1, has caused considerable damage to the square and prevented its peaceful use by other Londoners, including those who may have wished to conduct an authorised protest".
However, the protesters appealed.
Their lawyer argued the Mayor had no right to evict them because the land belongs to the Queen.
Today the Master of the Rolls, Lord Neuberger, ruled although the title to the land is vested in the Crown, the Greater London Authority Act 1999 grants the Mayor control over it.
The two-and-a-half-month protest has cost Westminster council tax payers more than £250,000 in clean-up costs so far.
Council leader Colin Barrow said he is delighted by today's ruling.
"We all support peaceful protest, but it is completely unacceptable for parts of our city to be occupied and turned into no-go areas by vociferous minorities, however laudable each cause might be," he said.
"This decision will mean that ordinary Londoners and visitors can once again use the square."
Brian Haw, the anti-war protester who has been camped outside parliament since 2001, is not affected by the ruling.
Dods Parliamentary Communications Ltd