Campaign group Together Against Sizewell C argued that Britain failed to consider the environmental impacts of the need for a water supply when approving the plant, which is being built by French energy giant EDF.
The group's legal challenge was rejected by the High Court in June and an appeal against that decision was rejected by the Court of Appeal on Wednesday.
Together Against Sizewell C said, in a joint statement with fellow campaign groups Suffolk Coastal Friends of the Earth and Stop Sizewell C, that it was "dismayed" by the judgment.
"Our fight for the soul of Suffolk will continue and we are in discussions with our legal team to consider our plans moving forward," they said.
A spokesperson for Britain's energy department welcomed the ruling.
The building of the plant in southeast England, capable of producing around 3.2 gigawatts of electricity or enough to power around 6 million homes, was approved in July 2022.
EDF anticipates both reactors at Sizewell C will be operational by mid-2034, its lawyers said at the initial High Court hearing in March.
In September, Britain opened the search for private investment in project, inviting potential investors to register their interest.
The government announced last year that it would support Sizewell C with around 700 million pounds ($886 million) while taking a 50% stake during its development phase.
At the time, then business minister Grant Shapps said the plant would secure "greater energy independence", a key focus since Russia's invasion of Ukraine sent energy costs surging.
