The Home Secretary's refusal to tell scores of immigrants and refugees why they have been refused British citizenship has triggered a legal battle over "secret justice".

Theresa May declared that she was not satisfied the unsuccessful applicants were "of good character".

But she said she could not give the reasons because of "national security" considerations.

It is understood that up to 100 applicants are going to the High Court to seek damages and declarations that they are victims of a breach of natural justice.

They want rulings that the decisions to refuse naturalisation under the 1981 British Nationality Act without giving adequate reasons were legally flawed and a violation of human rights.

The Home Office has indicated applicants were turned down because there was "reason to believe" they had made "extremist" Islamic statements to others or in some other way acted in a way that might threaten national security.

The applicants argue in their requests for judicial review that they are being denied the fundamental "right to know" enough of the evidence against them so that they can seek to rebut it.

Counsel for one applicant described her client as the victim of "secret denunciation - the stuff of nightmares".

Before the cases can be heard at London's High Court a highly controversial preliminary issue has to be resolved.

It amounts to: can the Government use a "closed" procedure to fight off the pending legal challenges.

This would involve excluding the applicants from court while secret evidence said to be "security sensitive" was put before a judge.

Recently Justice Ouseley heard opposing submissions from lawyers for the applicants and for the Home Secretary and will shortly give what could be a landmark decision for "secret justice" cases in which national security issues are raised.

The judge heard argument in the four lead cases of AHK, AS, FM and AM, who cannot be named for legal reasons.

James Eadie QC, representing the Home Secretary, argued that a "closed material procedure" (CMP) should be adopted at the pending hearings.

Lawyers for the applicants said this would hit at the fundamental principles of natural justice and fairness that underpinned the rule of law.

They urged the judge to order the Government to follow the more traditional route of applying to the court for security sensitive material to be kept confidential under what they contend would be a fairer "public interest immunity procedure"(PII).

The PII process would mean a judge deciding what material should be disclosed openly in the interests of the fair administration of justice and what should remain undisclosed to protect national security interests.

Crucial to the "CMP v PII" dispute is the Supreme Court case of Al Rawi, in which the Government wanted to use closed evidence to rebut human rights abuse claims for damages brought by claimants, including a former Guantanamo Bay detainee.

The Supreme Court justices ruled that, as there was "no statutory authority" for any form of closed evidence process, its use was "impermissible".

At the High Court, Eadie submitted to Justice Ouseley that judicial review cases in which Government decisions came under challenge were different from the situation in Al Rawi.

In written statements before the court, Eadie argued that naturalisation was "a privilege not a right" and, although the context was a relatively serious one, it was not to be compared with Al Rawi, which alleged claims of detention, rendition and mistreatment.

Even though there was no specific statutory authority for CMPs, judicial review cases involving security sensitive material should be regarded as in "a special category" and closed evidence admitted, submitted Eadie.

There was nothing "fundamentally inimical to the rule of law" in having a closed process.

Eadie said it would be ironic if cases about applicants wishing to become British citizens required the disclosure of information "that might put at risk the safety of British citizens".

He contended the PII process provided no solution as to how the court should proceed in a case where the Home Secretary's decision was based on sensitive material which could not be made open.

Lawyers for the four applicants argued the closed evidence approach would be unjust.

Stephanie Harrison, representing AS, said it would breach "a fundamental principle" contained in the Al Rawi ruling - "the right to know the case against you".

Introducing closed material in judicial review proceedings, and excluding the applicants from court while it was considered, would be both controversial and inherently unfair.

Ms Harrison described AS as a refugee from Libya who has lived continuously in the UK since September 2000.

The 43-year-old applied for UK citizenship in 2005, but the secretary of state refused in August 2008 on national security grounds, saying that to give reasons would be "contrary to the public interest".

AS challenged the decision. He was told in January this year his naturalisation had been refused because there was reason to believe he had made statements "of an Islamist extremist nature" to a number of individuals.

There was also reason to believe he had been involved in "a range of activity for the purpose of advancing an Islamist extremist agenda".

Ms Harrison argued that was still insufficient information to allow AS to make effective representations to rebut the allegations, which were "deeply damaging" to his reputation and had left him stateless.

"Citizenship is the foundation status in any society for exercising important civil and political rights," she argued.

"Critically what is an issue is not just the denial of citizenship but the implication that you are of bad character, and more significantly there is the allegation you are involved in activities that threaten the national security of the UK.

"It could not be more serious in terms of reputation and all that that may mean."

"It is secret denunciation - the stuff of all nightmares."

The Home Secretary had failed in her public law duty to give proper reasons and the applicants should be given a fair opportunity to challenge her decision at the High Court, argued Ms Harrison.

If closed evidence was allowed, AS could lose his case and never know the reasons why.