A panel of five judges ruled there were no grounds to reconsider a decision that the hate cleric would not face torture if returned to Jordan, sources said.
The decision was a narrow escape for Theresa May, Home Secretary, after the court decided the application was submitted within time.
The firebrand will remain in the country for up to a year because he will now resume a separate legal challenge against assurances that he will face a fair trial.
Qatada was arrested and returned to custody last month after the Home Secretary resumed his deportation.
A panel of five judges will hold talks on whether the case should be heard by the Grand Chamber of the European Court of Human Rights (ECHR) in Strasbourg.
Qatada’s appeal, lodged on April 17, prompted a row with Home Secretary Theresa May over whether the three-month appeal deadline from the court’s original decision on January 17 expired on the night of April 16 or 17.
But it will remain unclear whether Mrs May was right to say that Qatada’s appeal was made too late as the judges are likely to simply say whether or not the appeal against deportation can go ahead.
The panel may not reach their final decision today and, even if they do, they may not announce it until later, a spokesman for the court said.
Very few Grand Chamber appeals are successful, but if the appeal is granted, Qatada, 51, is likely to apply to a senior immigration judge for bail and could be freed from Belmarsh high-security jail within weeks.
Mr Justice Mitting indicated that he would reconsider the preacher’s detention if his deportation was “not imminent”.
Yesterday Theresa May, the Home Secretary, was faced with mounting evidence that her officials had made an error over a deadline for Qatada, whose real name is Omar Othman, to appeal to the European Court of Human Rights, which may have allowed him to prolong his stay in Britain for up to a year.
Any prospect of a lengthy legal process would greatly increase the chances of the cleric once described as Osama bin Laden’s right-hand man in Europe being granted bail, the judge suggested.
Mrs May insists she was free to arrest Qatada and restart deportation proceedings on Tuesday because a deadline to appeal to the Grand Chamber of the Strasbourg court passed at midnight on Monday.
But Qatada’s lawyers argue that the deadline was 24 hours later, and submitted a last-ditch appeal on Tuesday night.