The high court has backed moves by Camden council to fine anyone busking without a licence up to £1,000, despite a high profile campaign against the policy from comedians Mark Thomas and Bill Bailey and musician Billy Bragg.
The council adopted part V of the London Local Authorities Act 2000 late last year, in a move which would force buskers to buy a yearly licence or face a steep fine and potentially having their instrument taken away by police.
The licences only allow buskers to play between 10:00 and 21:00 and place restrictions on drums, wind instruments and sound amplifiers. They can only be used for solo or dual performances.
The ruling is a major setback for the Keep Streets Live Campaign, which had to pay £7,500 costs and was denied the chance to appeal.
Camden's policy against busking had been put on pause while the court case took place, but will now go ahead.
Mrs Justice Patterson rejected the argument that the council had defined busking too broadly or that there was a lack of evidence to justify the council's response.
She also dismissed concerns that it was a disproportionate response which would interfere with buskers' human rights.
The policy was "both necessary and a proportionate response to the issue of busking", she said.
David Wolfe QC, appearing for the Keep Streets Live Campaign, asked for an appeal, saying: "This is a case where there is a wider interest in granting permission. Not only does it affect Camden, but a lot of what your ladyship said has a wider impact potentially across the whole of London."
The appeal was refused permission, meaning lawyers for the campaign will now ask permission of the court of appeal directly.
"We will now seek permission to take this decision to the court of appeal," Leigh Day solicitor Rosa Curling said.
"The council's draconian licensing policy is unnecessary, unlawful and threatens the very essence of what makes Camden such an important cultural space."