Monday's ruling on financial aid for faith-based groups did not address whether the programme itself violated the US constitution's requirement on the separation of church and state.
Justice Samuel Alito said in the majority ruling that payment of taxes is generally insufficient to establish the legal right to challenge a federal government action.
"If every federal taxpayer could sue to challenge any government expenditure, the federal courts would cease to function as courts of law would be cast in the role of general complaint bureaus," he wrote.
George Bush, the US president, reacted to the decision saying it was "a substantial victory for efforts by Americans to more effectively aid our neighbours in need of help".
Bush created the White House Office of Faith-Based and Community Initiatives and similar centres in various federal agencies in 2001 aimed at fighting poverty, substance abuse and other social problems.
"This is a very significant victory that sends a powerful message that atheists and others antagonistic to religion do not get an automatic free pass to bring lawsuits"
Jay Sekulow, American Centre for Law and Justice
He said the programme, which has recorded a substantial impact, was to level the playing field between religious and secular groups in competing for government money.
Lawyers for the US administration said a 1968 Supreme Court precedent allowed such challenges by taxpayers in religion cases only if the programme was funded under a specific congressional appropriation.
They said Bush's initiative was financed through a White House discretionary fund.
"This is a very significant victory that sends a powerful message that atheists and others antagonistic to religion do not get an automatic free pass to bring... lawsuits," said Jay Sekulow of the American Centre for Law and Justice.
Opponents said although disappointing, the ruling has minimal impact and will not block other lawsuits against the White House initiatives.
Reverend Barry Lynn, of the group Americans United for Separation of Church and State, said the decision "blocks the courthouse door for Americans with legitimate church-state grievances".
He said the ruling applied to only a few situations, adding that "most church-state lawsuits will not be affected".
A White House report said a total of $2.1bn federal funding was given to religious charities in 2005, up seven per cent from the previous year.
The figure represented 10.9 per cent of the grants from the seven federal agencies providing money to faith-based groups.
Erosion of rights
The court, in a separate ruling on Monday, also said schools can ban student expression if it advocates drug use, even off school grounds.
John Terret, Al Jazeera's Washington correspondent, said the rulings raised questions over how much a shift in political balance towards conservatives was affecting court decisions.
The court said the headmistress of an Alaskan school acted within her rights to suspend a student who unfurled a banner off school grounds saying "Bong Hits 4 Jesus", pending investigations into whether or not the wording was related to drugs.