Yesterday High Court Judge Mr Justice Newey ruled against the club after they argued the VAT portion of its massive tax bill was over-valued by £7.5million.

But after describing his deliberations as "difficult", Mr Justice Newey granted the club the right of appeal.

Should the expected appeal be successful then yesterday's ruling would be reversed

and the HMRC's decision struck out before the petition reaches a final hearing.

In a statement released in conjunction with Portsmouth's legal representatives, Neumans LLP, the club said: "We would like to once again thank supporters for their continued support and patience.

"The owner, the board and associates would like to assure fans that they are working hard towards a positive solution and are confident that this matter will be resolved in our favour."

There is a seven-day window for Pompey to lodge their appeal.

A spokesperson for the Judicial Communications Office had earlier announced the ruling with the following statement: "At the High Court Mr Justice Newey dismissed an application from Portsmouth City (sic) Football Club Limited for a winding up petition to be struck out. A further hearing to consider HMRC's winding up petition will take place in due course."

That hearing is now expected on February 10, pending appeal, and the outcome could send Portsmouth a step closer to being the first Barclays Premier League club to drop into administration.

The decision was the latest blow for Portsmouth's owner Ali Al Faraj, who has been battling huge club debts since the day he took over.

But an argument with the tax man is by far the most serious, particularly given HMRC's increased willingness to serve football clubs with winding-up orders since losing their status as a preferred creditor of those in administration.

Portsmouth have been fighting financial fires on several fronts this season.

They have three times failed to pay their players on time, and only last week saw the Premier League divert television revenue payments to other clubs who were still owed transfer fees by Portsmouth.

The Premier League made that move after meeting with Portsmouth officials but coming away unconvinced they were in any position to pay their debts on a series of deals, some involving players who have since been sold on.

The club insist they have paid off the three UK teams they owe and have agreements in place with French sides Rennes and Lens. Executive director Mark Jacob also said on Monday a deal was close with Italian outfit Udinese.

Players' union boss Gordon Taylor believes it was "human nature" Stoke should refuse to pay over the odds for David James and has dismissed the idea anyone is trying to take advantage of Portsmouth's financial crisis.

Pompey goalkeeper James looked set for a move to the Britannia Stadium last week before talks broke down due to disagreement over the player's wages.

But Professional Footballers' Association chief executive Taylor thinks the Potters acted within their rights and said the James episode simply illustrates the dilemma Portsmouth are currently facing.

Taylor told Press Association Sport: "It's human nature that if a club is in trouble and needs to sell its players, then clubs may well come in for those players and won't necessarily offer them top dollar because they know they are desperate for the money."