Diane Modahl, the former British 800 metres runner, faces financial ruin but has vowed to fight on, despite losing a High Court case for damages claiming she was treated unfairly after testing positive for drugs.

Modahl, who was claiming £1 million sterling in damages from the British Athletic Federation (BAF), which ran athletics when she was banned in 1994, will now have to sell her house to meet the legal costs and has spent all her savings fighting the case.

The 34-year-old claimed in the High Court in London, that the BAF treated her unfairly and showed bias against her after she tested positive for testosterone and was banned from competition by the organisation's disciplinary committee for four years in December 1994.

An independent appeal panel lifted the ban in July 1995 after doubts were cast on the accuracy of the tests on Modahl's urine. Mr Justice Douglas Brown ruled yesterday that Modahl had received a "fair deal" and was not entitled to any compensation.

A tearful Modahl, who was accompanied by her husband Vicente said after yesterday's hearing: "I disagree strongly with the verdict of the judge. I feel that after six years of a very difficult fight he has come to the wrong decision."

Modahl was claiming the £480,000 she has already spent on legal and medical fees from the BAF, which is no longer in existence, in addition to a similar amount in punitive damages for the way the organisation handled her case.

In a ruling that could have implications for other athletes, the judge claimed that Modahl's case could not succeed because there was no contract between her and the BAF and that legally, the organisation was not under any obligation to give her a "fair ruling," even though she received one.

Tony Morton-Hooper, Modahl's lawyer claimed that other sports stars may have to ensure that receiving a fair disciplinary hearing is written into their contracts.

The judge refused Modahl leave to appeal but she can still make an application directly to the Court of Appeal. Modahl said after yesterday's hearing that she planned to appeal.

Meanwhile, the agent of French athlete Marie-Jose Perec has denied press reports in France that the former Olympic champion had returned to training.

Annick Avierinos said on Monday that Perec, who mysteriously walked out of the Sydney Olympics without even competing, had not yet resumed training with a view to picking up her flagging career.