The decision upholds current government policy, one which forces the Baha'is either to lie about their religious beliefs or give up their state identification cards. The policy effectively deprives Egyptian Baha'is of access to most rights of citizenship, including education, financial services, and even medical care.
The case has been closely monitored by advocates of civil rights and religious freedom across the world, and especially in Mulsim majority countries.
"We deplore the Court's ruling in this case, which violates an extensive body of international law on human rights and religious freedom to which Egypt has long been a party," said Bani Dugal, the principal representative of the Baha'i International Community to the United Nations.
"Since this was the last avenue of appeal in this particular case, the Court's decision threatens to make non-citizens of an entire religious community, solely on the basis of religious belief," declared Ms Dugal.
"Our hope now is that the public debate over this issue will cause the Egyptian government to rectify its discriminatory policies," she added. "This could be accomplished either by allowing Baha'is to be listed on government documents, by abolishing the religious affiliation listing entirely or, simply, by allowing the word 'other' to be legally included on state identification forms."
The case stems from a lawsuit filed against the government by a married couple, Husam Izzat Musa and Ranya Enayat Rushdy, who had their identification cards and passports confiscated after they applied to have their daughters added to their passports, which listed the Baha'i Faith as their religion.
In Egypt, all citizens must list their religious affiliation on state ID cards and other documents, and current policy requires that they choose from one of the three officially recognized religions - Islam, Christianity or Judaism.
In April 2006, a lower administrative court ruled in favor of the couple, saying the state must issue them ID cards that properly identified their religion. The ruling said that even if the government did not recognize the Baha'i faith, adherents should still have their religious status properly stated on official documents.
That ruling provoked an outcry among extremist elements in Egyptian society, who objected to any official mention of a religion other than the three mentioned in the Qur'an, opening a vigorous debate over issues of religious freedom and tolerance here.
Since April, more than 400 articles, stories, commentaries and programs have appeared in the Egyptian and Arabic news media about the case or its fallout. As well, independent human rights organizations here and abroad have closely followed the issue.
In May 2006, the government appealed the lower court's ruling, which brought the case before the Supreme Administrative Court.
On 2 December, a final hearing was held on the case, at which Baha'i lawyers argued for rejection of the government's appeal, on the basis that the lower court's ruling is fully supported by Egyptian law. The Court said at that time that it would release its final ruling this week.