Toddler Alfie Evans, who suffers from a rare neurological disease, had his ventilator support removed late on Monday, but has continued breathing independently for more than a day.
Three judges sitting in London's Court of Appeal upheld a Tuesday ruling that the 23-month-old could be taken home from Alder Hey Children's Hospital in Liverpool, northwest England, but could not be taken to Rome for further treatment.
"The respective appeals... must be refused," said Judge Andrew McFarlane.
Noting the boy's father, Tom Evans, had displayed "utter focus and tenacity", the judge added: "this is awful for everyone concerned".
Paul Diamond, a lawyer for Tom Evans, told the court the parents were not "seeking a miracle cure in Italy".
Source: AAP
"They are simply seeking the palliative care that is needed," he added.
Diamond told the judges a plane would be leaving from northern Italy tonight, ready to transport Evans back to the country if permitted.
"We accept this is an uphill task, that we are pushing the boundaries."
Andrea Williams, chief executive of Christian Legal Centre whose lawyers lodged the appeal, told AFP after the ruling: "now we all need to reflect".
"Alfie is obviously now very vulnerable and so everyone is very emotional," she said, praising his parents' strength.
"They've left no stone unturned for their child.
"They have great tenacity and believe passionately in life, and in giving Alfie the chance of life with appropriate care for as long as possible."
Tom Evans told reporters outside the hospital on Tuesday his son "could be in Italy right now".
"I'm not giving up because Alfie's breathing away, he's not suffering," he added.
The father said that he had occasionally needed to give his son mouth-to-mouth "because his lips went blue and he was really fighting".
'Want him to die naturally'
Pope Francis has intervened in the case that has attracted worldwide attention, writing on Twitter that he hoped the parents' "desire to seek new forms of treatment may be granted".
Italy has previously said it was granting citizenship to the toddler and an Italian defence ministry medical evacuation plane is on standby to fly Evans to Italy.
High Court judge Anthony Hayden on Tuesday rejected claims by the parents that Evans was "significantly better" since doctors first withdrew life support on Monday.
The judge said the best they could hope for was to explore the options of removing the boy from intensive care either to a ward, a hospice or his home.
Hayden on Monday rejected another appeal for a delay in order to give the parents time to present a new challenge.
The ruling allowed doctors to withdraw treatment.
High-profile battles
British law states that parents "cannot demand a particular treatment to be continued where the burdens of the treatment clearly outweigh the benefits for the child".
If agreement cannot be reached between the parents and the healthcare professionals, "a court should be asked to make a declaration about whether the provision of life-sustaining treatment would benefit the child".
The case is the latest in a series of high-profile battles between parents of ill children and the British authorities.
The most recent example was that of Charlie Gard, who was born in August 2016 with a rare form of mitochondrial disease.
He died last year, one week short of his first birthday, after doctors withdrew life support treatment.
Gard's parents fought a five-month legal battle for him to be taken to the United States for experimental treatment.
The parents of Ashya King defied professionals in 2014 when they snatched their cancer-stricken son from a British hospital and took him to Prague for proton beam therapy.
King, now eight years old, has since been declared clear of the disease.
The Bambino Gesu (Baby Jesus) paediatric hospital in Rome, which is administered by the Vatican, has said a specially-equipped plane is on standby to fly to Britain to pick up Evans if he is released.
Tom Evans met the pope in the Vatican last Wednesday after several statements of support made by the pontiff.
At an audience last week, he told attendees in reference to the case: "I want to reiterate and strongly confirm that the only master of life, from the beginning to its natural end, is God, and our duty is to do everything to protect life."
Hundreds of people have protested outside the Liverpool hospital in support of the father's plea for the boy to be discharged.
