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Eliyahu Veffer wanted Canada to recognize his birthplace as part of Israel. (CBC)

An 18-year-old man who was born in Jerusalem has lost his legal battle to have Israel shown as his birthplace on his Canadian passport.

In a decision released Monday, the Federal Court ruled the government is justified in its policy of listing "Jerusalem" alone on passports because the city's status is unresolved.

Canada has never recognized Israel's 1967 annexation of Jerusalem. Although Israel calls Jerusalem its eternal capital, almost all foreign embassies have remained firmly planted in Tel Aviv.

Jerusalem-born Eliyahu Veffer, a Grade 12 student in Toronto, wanted Canada to recognize his birthplace as part of Israel.

"The fact that I was born there, in Israel, to me that's a fulfillment of the Jews saying for years, thousands of years, 'next year in Jerusalem,' " Veffer said. "That had been fulfilled with me by being born there."

Faraj Nakhleh, acting president of the Canadian Arab Federation, said his group sees things differently.

"If he were born in Tel Aviv, it would have been fair – according to what Canada recognizes – to put Tel Aviv, Israel. The gentleman in question was born in a disputed city. Canada recognizes Jerusalem as a city under military occupation."

Veffer said the Jerusalem rule discriminates against Jews.

"My religion teaches me that Jerusalem is the capital of Israel," Veffer said in his affidavit. "This is an integral part of my religious belief."

The government of Canada argued that since the same rule would apply to a Muslim or Christian born in Jerusalem, there is no discrimination on religious grounds.

Justice Konrad von Finckenstein ruled that a change in policy might be misconstrued as a softening of Canada's position toward Israel's occupation, and could harm Canada's ability to act as an honest broker for peace in the Middle East.

The judge ruled that "passports do not deal with, nor are they a reflection of, a person's roots, heritage or belief."