Roman Catholic representatives deny there are attempts to convert Muslims and say the government ban is unreasonable because Christians who speak the Malay language had long used "Allah" in their Bibles, literature and songs before authorities sought to enforce the curb in recent years.
Judge Mohamed Apandi Ali, who led a three-member appeals court panel, said the use of "Allah" was "not an integral part of the faith and practice of Christianity."
"It is our judgment that there is no infringement of any constitutional rights" in the ban, he said. "We could find no reason why the (Catholic newspaper) is so adamant to use the word 'Allah' in their weekly. Such usage if allowed will inevitably cause confusion within the community."
The Rev. Lawrence Andrew, editor of the Catholic newspaper, The Herald, said they plan to appeal Monday's verdict in Malaysia's Federal Court, the nation's highest.
"We are greatly disappointed and dismayed," he said. "This is unrealistic. It is a retrograde step in the development of law in relation to the fundamental liberty of religious minorities."