The full bench of the court on Wednesday rejected a legal challenge to the federal government's offshore immigration detention regime.
It did so after considering the case of a pregnant Bangladeshi asylum seeker who was brought to Australia from Nauru for treatment for serious health complications.
She faced the prospect of being returned to the Pacific island with her one-year-old child.
In a majority decision the court said the woman's detention on Nauru was not unlawful.
It also ruled the commonwealth's role in her detention was authorised under Australian migration laws, and the government's offshore processing deal with Nauru was valid under the constitution.
"The High Court held, by majority, that the plaintiff was not entitled to the declaration sought. The conduct of the Commonwealth in signing the second MOU with Nauru was authorised by s 61 of the Constitution," the judgment said.
"The Court further held that the conduct of the Commonwealth in giving effect to the second MOU (including by entry into the Administrative Arrangements and the Transfield Contract) was authorised by s 198AHA of the Act, which is a valid law of the Commonwealth."
Concern for fate of 267 asylum seekers
The ruling has implications for 267 other people - including 91 children - who are in Australia for medical treatment.
Of the 54 children, 36 are attending Australian schools.
The federal government is now under pressure to show compassion towards the group.
Human rights lawyer Claire Hammerton from the advocacy group for child refugees the concern is now for 90 children set to be returned to Nauru.
ChilOut is extremely worried about these children and their families, and in particular the 37 babies who were born in Australia, who will be deliberately sent to a place the Australian Government knows is unsafe for children, she said.
PM Turnbull urged to act
Save the Children, which has had a child protection role on Nauru, called on Prime Minister Malcolm Turnbull to show some compassion towards the 37 babies and older children.
"If found to be genuine refugees, we urge him to do the decent thing and offer these vulnerable people permanent protection here in Australia," spokesman Lee Gordon said in a statement.
Australian Greens senator Sarah Hanson Young said the prime minister would be authorising child abuse if the families were sent back to Nauru.
"The evidence is clear and its undeniable that Nauru is unsafe for women and children and sending them back would be torture," she said.
Amnesty International said it was concerned that asylum seekers would be subjected to human rights violation - referring to reports of sexual harrassment and abuse - if returned to Nauru.
Amnesty International, as well as numerous other organisations and individuals, has submitted several formal requests to visit Nauru with the intention of independently reviewing the conditions and assessing the overall human rights situation, but to no avail," Amnesty International Australias Refugee Coordinator, Dr Graham Thom said.
Dutton: We're not going to send people into harm's way
Ahead of the ruling, Immigration Minister Peter Dutton insisted the government was acting in the best interests of asylum seekers brought to Australia for health care.
But the government had to be mindful of the message being sent to people smugglers.
Although, he wanted to reduce the number of children in detention to zero, people smugglers were channelling a message to potential customers that "Dutton's a soft touch and you can put women and children on boats and be successful".
The federal government, with Labor's support, had retrospectively changed laws to bolster the Commonwealth's ability to pay for the offshore facilities last year.
Its case in part hinged on a sudden decision last October by the Nauru government to allow asylum seekers to roam around the island nation at will.
