Australia lost its appeal overnight against a World Trade Organization ruling that it should accept the New Zealand fruit, forcing the export-dependent nation to give up the long-running fight.

Australian Agriculture Minister Joe Ludwig said the government would now conduct a review of the import risks posed by New Zealand apples, a process which could take the best part of a year.

"Just as for any other product, no trade in New Zealand apples can occur until quarantine measures that appropriately protect Australia and our agricultural producers have been determined," Ludwig said.

"That will occur following the completion of the review."

Australia first imposed a ban on New Zealand apples in the early 1920s over an outbreak of fireblight, a disease affecting fruit trees.

Canberra lifted the outright ban in 2006 but imposed strict conditions which New Zealand said made its exports uneconomic, prompting it to complain to the WTO in 2007.

In August, the WTO ordered Australia to ease the restrictions but Canberra launched an appeal, which was rejected on Tuesday.

New Zealand Prime Minister John Key said his country had scored a "resounding victory" and he hoped Australia would not "play games" with unfair quarantine measures designed to bypass the decision.

"We would be very disappointed if they did that and, at the end of the day, they put up their case, we put up ours. It's been a hard-fought process but New Zealand has had a resounding victory," he told TV ONE.

"I do believe that Australians will be chomping their way through New Zealand apples before too soon."

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