The owner of Heathrow and Stansted airports, BAA Plc, and the government welcomed the ruling as an endorsement of airport expansion plans, which have been vehemently opposed by local residents and environmental groups.
"I am pleased that the High Court has upheld the case for two additional runways in the south of England at Heathrow and Stansted and rejected calls for that part of the Air Transport White Paper to be quashed," Transport Secretary Alistair Darling said in a statement.
The government's Air Transport White Paper, published in December 2003, backed plans for the second runway at Stansted as part of a 30-year strategy to cope with soaring demand for air travel, particularly in England's crowded south-east.
Local residents and authorities launched the legal challenge, seeking to overturn the white paper and rule the airport expansion plans as economically unviable.
Stansted is a base for no-frills airlines Ryanair and easyJet. The second runway is expected to be completed by 2012 at a cost of 4 billion pounds ($7.6 billion).
"This judgement allows BAA to press ahead with exploring ways to achieve better use of Heathrow's existing two runways, planning a new runway at Stansted, and examining the feasibility of a third runway at Heathrow," BAA Chief Executive Mike Clasper said in a statement.
BAA said it would need to come back with a new proposal for the precise location of the Stansted runway which is expected to involve consultation with residents and environmental groups.
The court also ruled the government should not have given the impression of supporting plans for expanding the runway at a third airport, at Luton, without full consultation, the government said in a statement.