Mr Justice Dyson upheld a decision by Stratford on Avon DC that Richard White - an elder of the Jesus Fellowship Church - is not eligible for the benefit.
He said: 'The council was of the view that, if Mr White was under a liability to pay, that liability had been created to take advantage of the (housing benefit) scheme'.
'In a case such as the present, it seems to me that, when considering the central question whether a liability to pay has been created to take advantage of the scheme, a Board is clearly entitled to ask what was the primary or dominant reason for creating the liability,' he added.
The court heard that the rules of the Jesus Fellowship Community Trust oblige members such as Mr White to 'pool' their income, including paying a board and lodging charge of£55 per adult per week.
Mr White, and other church members, applied for housing benefit in September 1993, but were informed by the district council that they did not qualify because their 'liability to make payments in respect of the dwelling' had been created 'to take advantage of the housing benefit scheme'.
Their appeal to the council's housing benefit review board was rejected in July 1994.
Mr Justice Dyson said the district council's case was that 'the liability to pay board and lodging was artificial and created to take advantage of the Housing Benefit Scheme'.
'The Board accepted the council's arguments,' he said.
The judge dismissed Mr White's case, ordering him to pay the action's legal costs.
The court heard that nine other church members had originally lodged judicial review applications alongside Mr White, but in the event only his application was pursued before the Court.