Among visa applications to be rejected will be those of British citizens in full-time employment on minimum wage

The Court of Appeal has dismissed a legal challenge to Home Office rules for UK citizens who want their overseas spouses to live with them in Britain, affecting more than 3,600 families.

The visa applications of 3,641 families have been on hold since 5 July last year while the appeal court ruled on the legality of a new Home Office minimum income threshold of £18,600 for sponsoring a foreign spouse. The appeal court ruling is expected to clear the way for the Home Office to refuse most of those applications.

Campaigners say that many thousands more families who were put off from applying by the £18,600 income threshold since it was introduced in 2012 will also be affected. They say that the families who remain separated include British citizens in full-time employment on the minimum wage who are too poor to enjoy the right to a family life.

Ruth Grove-White, policy director of the Migrants' Rights Network, which has been campaigning for the right of British citizens to have their family life respected, said: "This judgment will be devastating for the families who continue to be needlessly separated across borders. Many UK residents and British citizens have had their lives put on hold for over a year, often with no chance of seeing their loved husbands, wives or children during that time."

Grove-White said that almost half the working population of Britain earned less than the required £18,600. "These rules are a shocking infringement of the right to family life. Being able to start a family in your own country should not be subject to the amount of money you make."

The appeal court ruling followed a legal challenge by the home secretary, Theresa May, to a high court judgment last July, which said the £18,600 was "onerous" and "unjustified". Mr Justice Blake then ruled that the financial requirements amounted to "a disproportionate interference with a genuine spousal relationship" and suggested that a threshold of £13,400, which was more in line with the national minimum wage, would be more appropriate.

But the three appeal court judges said that his analysis and conclusion that the income rules breached the human rights of the British husbands, wives or partners was not correct, so the rules were lawful.

The case was brought on behalf of two British citizens, Abdul Majid and Shabana Javed, who both live in Birmingham and a refugee, MM, who has the right to remain in Britain, who are married to spouses who live outside Europe.

Lord Justice Aikens, one of the three appeal court judges, said he was very conscious of the evidence submitted that only 301 of the 422 occupations listed in the 2011 UK earnings data had annual average earnings over £18,600.

"But, given the work that was done on behalf of the secretary of state to analyse the effect of the immigration of non-European Economic Area partners and dependent children on the benefits system, the level of income needed to minimise dependence on the state for families where non-EEA partners enter the UK, and what I regard as a rational conclusion on the link between better income and greater chances of integration, my conclusion is that the secretary of state's judgment cannot be impugned.

"She has discharged the burden of demonstrating that the interference was both the minimum necessary and strikes a fair balance between the interests of the groups concerned and the community in general."

The judge said it was not up to the court to impose its own view on what the minimum income threshold should be, unless it was irrational, unjust or unfair.

Paul Blomfield MP, of the all-party parliamentary group on migration, said the ruling would come as a disappointment for thousands of families across the UK who remained apart as a result of these rules. "A year ago, a cross-party group of MPs recognised the anguish they have caused and urged the government to review the family migration rules. That concern was highlighted again this week in a packed meeting in the House of Commons. On behalf of our constituents, we will continue to press the government to think again," he said.

A Home Office impact assessment published in June 2012 estimated that the chosen income threshold would prevent 17,800 family visas being granted every year.

A Home Office spokesman said the judgment will mean that, from the 28 July, the 4,000 individuals whose applications are currently on hold, pending this judgment, will receive a decision: "These are cases [that] met all the requirements apart from the minimum income threshold and now stand to be refused," he said.

The immigration minister, James Brokenshire, said he was delighted by the appeal court ruling: "We welcome those who wish to make a life in the UK with their family, work hard and make a contribution, but family life must not be established in the UK at the taxpayer's expense and family migrants must be able to integrate.

"The minimum income threshold to sponsor family migrants is delivering these objectives and this judgment recognises the important public interest it serves," he said.