The US Supreme Court has refused to take up the case of two journalists who would not reveal their sources in a leak probe involving a CIA agent.
The two reporters face up to 18 months in jail for contempt of court
Judith Miller of the New York Times and Matthew Cooper of Time face up to 18 months in jail for contempt of court.
The two journalists, their employers and rights groups said they were dismayed by the court's decision.
US government officials leaked Valerie Plame's name in 2003 during a row over evidence used to justify war in Iraq.
Her husband, former ambassador Joe Wilson, claimed it was in retaliation for his public contradiction of President George Bush's claims in his 2003 State of the Union address that Iraq had sought to buy uranium in Niger.
The leak - a federal offence - was made to veteran newspaper columnist Robert Novak, who cited senior Bush administration officials.
Ms Miller and Mr Cooper investigated the Plame story, but were not involved in the leaking of her identity.
They chose not to co-operate with a grand jury inquiry into the leak, claiming they should not have to reveal their sources because of press freedoms guaranteed in the US Constitution.
Without giving comment, the US Supreme Court announced it was allowing a lower court's ruling that the two journalists should be jailed for contempt of court to stand.
"I am extremely disappointed," said Ms Miller, who never actually published an article on the Plame case.
"Journalists simply cannot do their jobs without being able to commit to sources that they won't be identified. Such protection is critical to the free flow of information in a democracy."
Both she and Mr Cooper have the backing of their employers.
"It is shocking that for doing some routine newsgathering on an important public issue, keeping her word to her sources, and without our even publishing a story about the CIA agent, Judy finds herself facing a prison sentence," said the New York Times' publisher, Arthur Sulzberger Jr.
The Newspaper Association of America has urged Congress to pass legislation that would protect reporters from having to disclose confidential sources, the Associated Press reported.
The case is now due to go back to US District Court Judge Thomas Hogan, who gave the original ruling against the journalists in October 2004.
Time magazine said they would be urging Judge Hogan to reassess the case, arguing that circumstances have since changed, the AFP news agency reports.