Bilal Kayed has been on hunger strike for 71 days in protest against his detention without charge by Israel and is currently chained by the leg to his bed in the intensive care unit of an Israeli hospital.
In its ruling on Tuesday, the Supreme Court "allowed the flagrant violation of rights of prisoners suffering from illnesses to continue," Physicians for Human Rights said in a statement.
"What this disappointing position means is that Kayed will remain shackled for many more days, even when he is hospitalised in life-threatening condition at the intensive care unit," the NGO quoted Tamir Blank, one of Kayed's lawyers, as saying.
Kayed was meant to be freed from prison in June after serving a 14-and-a-half-year sentence for activities in the Popular Front for the Liberation of Palestine, labelled a terrorist organisation by Israel, the European Union and the United States.
Instead, Israeli authorities ordered that he remain in custody until further notice. Amnesty International has called on Israel to either charge or release him.
Israel says this type of administrative detention allows authorities to hold suspects while continuing to gather evidence, while Palestinians, human rights groups and members of the international community have criticised the system.
Of more than 7,500 Palestinians currently in Israeli jails, about 700 are being held in administrative detention, Palestinian rights groups say. Palestinian prisoners have regularly gone on hunger strike in protest.
Palestinians hold posters of Palestinian prisoner Bilal Kayed, who has been on hunger strike for 71 days, as they demonstrate in front of the Red Cross headquarters in the West Bank city of Ramallah in support of prisoners on hunger strike in Israeli jails.
A rights group on Wednesday said Israel's Supreme Court was perpetuating abuses by failing to order that a Palestinian hunger striker shackled to his hospital bed be unchained.
