If Haddile had been granted refugee status, she would have been able to stay in Sweden indefinitely. Her lawyer told Swedish Radio News that he will appeal the Migration Board ruling.
In May, Haddile was granted a two-year residence permit after her story evoked strong reactions, with the Migration Board having ruled that she should be sent to an orphanage in France.
The girl's lawyer and legal guardian argue that she should be granted refugee status as her safety is at risk if she returns to Algeria.
"We will appeal this because we believe that a child born out of wedlock faces threats in Algeria where you become stigmatised for life," lawyer Carl Olof Lindberg told Swedish Radio News.
Haddile has lived with a foster family in southern Sweden since she was a few months old.