Local parents and the British Humanist Association have failed in a High Court bid to block proposals for two new Catholic schools.
The parents, who include Catholics, come from different backgrounds and say all new state schools in the London Borough of Richmond should have admissions policies that are religiously inclusive.
The BHA and the parents and their supporters asked a judge to overturn Richmond council's decision to offer the Catholic Diocese of Westminster a site in Twickenham to be used for a new primary and secondary school.
Mr Justice Sales, sitting in London, rejected their application for judicial review and said he would give his full reasons at a later date. The judge upheld Richmond Council's argument that it did not misdirect itself or act unlawfully over the faith schools.
Andrew Copson, chief executive of the British Humanist Association (BHA), said later: "We are disappointed, but once we see the full reasons for this judgment we will appeal if we possibly can. Today's case hinged on very technical issues but it raises wider questions relating to religious schools."
BHA launched its legal action jointly with the Richmond Inclusive Schools Campaign (RISC). Last year more than 3,300 local people supported a RISC petition to the council objecting to faith schools that were exclusive and calling for all new borough schools to be inclusive.
But the council voted to buy land in Clifden Road, Twickenham, for £8.4 million and invite the Catholic Diocese of Westminster to submit proposals for two "voluntary-aided" Catholic schools. In May, the council decided to lease the Clifden Road land for educational purposes to the Diocese for a peppercorn rent.
David Wolfe QC, representing both BHA and RISC, told the High Court the new primary school would, if oversubscribed, give priority to Catholic pupils when allocating all but 10 of its 30 places a year. The secondary school would initially give priority to Catholics in all of its 150 places a year, although making exceptions for applicants coming from the 10 "community" places at the primary school. After seven years, 93% of its places were expected to be allotted on the basis of religion.
Mr Wolfe argued that the council had breached its statutory obligation under section 6A of the 2006 Education and Inspections Act to take steps to seek proposals setting up an academy school offering more non-religious places. He told Mr Justice Sales that the council conducted a flawed consultation exercise and had sought to bypass its statutory duty.
Disagreeing, the judge said "section 6A does not apply in the circumstances" and he was satisfied that the consultation exercise was lawful.