The Daily Telegraph is considering an appeal to the House of Lords after it lost a court bid to overturn a £150,000 libel award to MP George Galloway.
Mr Galloway successfully sued the paper for suggesting he had received money from Saddam Hussein's regime in Iraq.
The paper said it was "disappointed" by the Court of Appeal's verdict.
Mr Galloway was unable to comment because of his stay in Channel 4's Celebrity Big Brother House. He was evicted on Wednesday night.
In what has been a busy news day for the Respect MP, it has also emerged that an investigation into complaints about his conduct could be reopened by House of Commons standards watchdog Sir Philip Mawer.
And the politician will also learn, when he leaves the set of the reality TV show, that the Serious Fraud Office is looking into the results of a UN-backed investigation into alleged kickbacks from Saddam Hussein.
A decision on whether to proceed to a full criminal investigation of UK links to the scandal is expected to be taken within the next couple of months.
Iraqi TV footage shows Mr Galloway with Saddam Hussein's son Uday
There is also controversy over footage in The Sun appearing to show Mr Galloway with Saddam Hussein's son, Uday. Uday and his brother Qusay were killed when US forces raided a house in Mosul on 22 July 2003.
But the day began well for Mr Galloway when Court of Appeal judges agreed that the £150,000 damages awarded to Mr Galloway by High Court judge Mr Justice Eady in December 2004 should not be reduced.
"Given the seriousness of the key allegation - Mr Galloway had taken money from Iraq for personal profit - we can see no basis upon which this court should interfere with the amount of damages."
Master of the Rolls, Sir Anthony Clarke, together with Lords Justices Chadwick and Laws, said the paper had not tried to justify the documents the story was based on as true only that publishing them was in the public interest.
"It defended the actions only on the basis of privilege and fair comment. The [original] judge rejected both defences. He was, in our judgement right to do so," the ruling said.
In a statement, Daily Telegraph deputy editor Neil Darbyshire said: "We are naturally disappointed by today's ruling and will study the details carefully before seeking leave to appeal against the decision to the House of Lords.
"There are criticisms of the tone and style of some parts of our coverage, which we will also examine further."
He said it was "particularly disappointing" that the Appeal Court, like the original trial judge, appeared to accept there was a difference between Mr Galloway receiving money for "personal gain" and "political campaigning".
"We have always maintained - and still maintain - that such a distinction is irrelevant," said Mr Darbyshire.
He said the Appeal Court judgement had not discredited the Baghdad documents uncovered by the newspaper's reporter.
"At no point in the judgement is the Daily Telegraph said to have been motivated by malice or to have told any deliberate untruths," he added.
James Price QC, for the newspaper, told the Court of Appeal the story, published in April 2003, had been covered by the legal defence of privilege because it was "of truly global significance".
The newspaper had apparently found evidence that a British MP, the leader of a worldwide campaign against sanctions in Saddam Hussein's Iraq and high-profile member of the anti-war lobby, had been accepting substantial amounts of money from the "oil for food" programme, Mr Price added.
He said it had never sought to prove Mr Galloway had taken money from the programme, designed to help sick and hungry Iraqis while the West imposed trade sanctions.
Mr Price said Mr Justice Eady had rejected the defence of privilege at the trial because the newspaper had also published its own conclusions.
He went on: "If it was entitled to publish documents under the protection of privilege, it was entitled to comment on them."
Privilege should not be lost because the newspaper took a different view of the correct interpretation of the documents to that of the trial judge, he said.
Outside the court, John Rees of the Respect party, said he was delighted with the verdict, claiming there had been "a sustained witch-hunt" against Mr Galloway.
The MP was expelled from the Labour Party for comments about the Iraq war, and went on to win the parliamentary seat of Bethnal Green at the 2005 general election as leader of the anti-war Respect party, ousting Labour's Oona King.