Malaysia's top court Wednesday rejected the appeal of a woman to be recognised as a Christian in a landmark case highlighting religious controversies in this mainly Muslim nation.

Lina Joy, who was born a Muslim and known as Azlina Jailani, had applied for both her name and religion to be changed on her identity card in 1999.

While allowing her name-change, the National Registration Department refused to drop her religion as Muslim from the identity card, saying she had to appeal to the Islamic Sharia courts.

However, Joy embarked on a legal battle in the secular courts, arguing that she was a Christian and therefore no longer bound by Islamic law.

A three-panel judge Wednesday ruled by a 2-1 majority that only the Islamic Sharia Court has the power to allow her to remove the word 'Islam' from the religion category on her identity card.

Dissenting Judge Richard Malanjum said it was unconstitutional for the registry department to insist that Joy turn to the Sharia Court, were she was likely to face criminal prosecution for seeking to convert.

Malanjum ruled that she was 'entitled to have an identity card where the word Islam does not appear' as she had converted to Christianity.

Malaysia's Islamic courts have a different set of rules and requirements according to different states. Currently, only one state out of 14 has provisions for Muslims to convert.

In other states' religious departments, apostasy is a crime punishable by fines and jail sentences and offenders are often sent to prison-like rehabilitation centres.

'It is indeed a very disappointing ruling,' said Ivy Josiah, head of the Woman's Aid Organisation, a local NGO fighting for rights of women.

'The bottom line is, we have a woman who wants to be a wife, a mother, and now she does not have that right,' Josiah told reporters.

Joy, who was not present at Wednesday's hearing, was said to be in hiding with her Catholic fiance for protection. She has been unable to get married, as her husband would have to embrace Islam as long as she was legally Muslim under the country's laws.

Outside the courtroom in Malaysia's administrative capital of Putrajaya, more than 300 Muslims representing as many as 80 Islamic groups gathered to pray for the courts to deny Joy's appeal.

Yusri Mohamad, president of the Muslim Youth Movement of Malaysia, welcomed the decision, saying that the court proceedings had been 'an attempt to deconstruct and revamp our current formula, a winning formula' for a peaceful multi-religous society.

Lawyers for Joy have declined to say what her next move would be, but Wednesday's court remains the last legal avenue for her.

'The outcome of this case has shown that we have a constitutional guarantee of freedom which cannot be enforced because our civil courts have no jurisdiction over religious matters,' said Leonard Teoh, a lawyer representing the Malaysian Consultative Council of Buddhism, Christianity, Hinduism and Sikhism.

'The only avenue now is for us to take a political approach. We will approach the political leaders,' said Teoh. 'People like Lina Joy should not be trapped in any religion.'

About 60 per cent of Malaysia's 26 million people are Malay Muslims, whose civil, family, marriage and personal rights are decided by Sharia courts. The minorities - the ethnic Chinese, Indians and other smaller communities - are governed by civil courts.