Having exhausted their options under British law, they told the court the ruling violated the European Convention of Human Rights.

It is the first time the Strasbourg court has heard such a case against the UK Government.

Former Navy Lieutenant Commander Duncan Lustig-Prean, ex-naval rating John Beckett, one-time RAF clerk Graeme Grady and ex-RAF nurse Jeanette Smith allege the Ministry of Defence policy on gays is inhumane.

All four were discharged after they revealed their sexuality.

The ban breached the human rights treaty, which Britain has signed, by limiting the four's freedom of expression, privacy and freedom from discrimination.

A UK High Court judge would heard previously the case upheld the MoD ban, but predicted it would not last much longer.

In Strasbourg, the government's legal team said the Defence Ministry would reconsider the issue when the next Armed Forces Bill goes before Parliament in 2001.

MoD policy currently describes homosexuality as "incompatible with service in the armed forces".

It adds: "If individuals admit to being homosexual whilst serving and their commanding officer judges that this admission is well founded, they will be required to leave the services."

After the first day in court, Stonewall's executive director Angela Mason predicted victory for gay rights campaigners.

"I doubt very much whether the court will accept that the intrusive questioning of lesbian and gay armed forces personnel is acceptable," she said.

"The comments of the presiding judge make it likely that the ban will be found to violate the European Convention."

Speaking ahead of the court hearing, an MoD spokesman defended the ban.