Imperial Tobacco and British American Tobacco were trying to overturn the ban on its brands, which health officials say create a false impression that they are better for smokers than the full-strength counterparts.
The new rulings will see 30% of the front of cigarette packets and 40% of the back of the packaging covered in health warnings against tobacco use.
However, tobacco firms will still be able to sell brands such as Dunhill Lights and Marlboro Lights in countries outside the EU.
Tobacco firms had argued that the ban on modifiers was not proven to be effective in cutting the number of cigarettes smoked. They have no right to appeal the ban, which will come into force on September 30 2003.
Last week, the EU ruled to ban tobacco advertising and sponsorship across all territories, in a move to standardise the law. The ban on tobacco advertising will cover print, the internet, radio and television, as well as sponsorship of sports events, and tobacco companies will be banned from distributing free cigarettes as a means of promotion.
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