Five Law Lords unanimously dismissed the appeal, saying that human rights legislation was in place to protect life rather than end it.
The mother of two, who suffers from motor neurone disease, now intends to take her fight to the European Court of Human Rights in Strasbourg, France. Pretty, 43, is paralyzed from the neck down and has to be fed with a tube.
Catholic Archbishop Peter Smith, archbishop-elect of Cardiff and chairman of the bishops´ Department of Christian Responsibility and Citizenship, said in a statement: "No one can fail to be moved by the suffering of Diane Pretty and her husband."
"However," he added, "with the continuing development of good quality palliative care, much can be done to alleviate such suffering and help maintain the dignity of those who are afflicted with terminal illness.
"We are duty bound to alleviate suffering, but it is always wrong to intentionally kill innocent human beings. The Law Lords have rightly upheld the longstanding prohibition against euthanasia and assisted suicide which exists, among other things, to protect the weak and vulnerable members of society."
Pretty is gradually become more disabled by her disease, and wants her husband Brian to be able to help her commit suicide without fear of prosecution. The Director of Public Prosecutions had refused to say it wouldn´t prosecute, and Pretty challenged this.
The case had already been rejected by the High Court, and she can now appeal to the European courts if she wishes.
One of the five, Lord Bingham of Cornhill, said assisted suicide was against the law and no one had the power to suspend or abandon laws without parliamentary consent.
He said: "No one of ordinary sensitivity would be unmoved by the frightening ordeal which faces Mrs. Pretty." But he added: "Mercy killing is in law killing."