"Contrary to our legitimate hopes, the court has not upheld our calls for dismissal [of the recordings as evidence]," Paul-Albert Iweins, one of Sarkozy's lawyers, said on Thursday morning.
The legal team would appeal, Iweins said, claiming that the ruling was "open to criticism legally speaking and also according to the principles laid down by the European Court of Human Rights".
Investigators bugged Sarkozy's calls to his lawyer, Thierry Herzog, during an inquiry into whether he had taken illegal election campaign funding from millionaire heiress Liliane Bettencourt, a charge of which he was later cleared.
The court on Thursday did throw out one recording on the grounds that the procedure for permission for the wire-tap had not been correctly followed but allowed the rest to be used.
Sarkozy's lawyers argued that the bugs were a breach of lawyer-client confidentiality.
The investigation, which was suspended in September, can now start again, although magistrates may wait for the result of the appeal before taking any decisive moves.
It is looking into suspicions that Herzog and Sarkozy were well informed about the progress of the Bettencourt case and that they discussed offering lawyer Gilbert Azibert a cushy job in Monaco in exchange for inside information.
Azibert was never given the job but has been charged along with Herzog and Sarkozy, who stands accused of corruption, influence-peddling and violation of legal secrecy.
The mainstream right opposition accused the government of "political espionage" in the case and Sarkozy claimed that the investigators were using the methods of the Stasi, the political police in the former East Germany.
The former president returned to political life last year, taking the leadership of the UMP which he wants to rename The Republicans and is widely believed to be planning to run for French president in 2017.
But this case is one of several that could make that impossible.