In a ruling published on its Web site Tuesday, the Council of State said Britain is responsible for Mehdi Kazemi's case, because it was there that the 19-year-old first applied for asylum.
Gay rights campaigner Rene van Soeren said Kazemi's Dutch lawyer was considering an appeal to the European Court of Human Rights. The lawyer, Borg Palm, did not immediately return calls seeking comment.
Boris van der Ham, a lawmaker who has taken up Kazemi's cause, has tabled questions in Parliament asking the junior minister for immigration, Nebahat Albayrak, to lobby British authorities on Kazemi's behalf.
Albayrak should either urge Britain not to send Kazemi back to Iran or offer him asylum in the Netherlands, Van der Ham said in a telephone interview.
"There should be some political leadership," he said. "I hope in Britain they will do it and otherwise we should take the boy."
Kazemi is not expected to be deported before Albayrak has answered Van der Ham's questions.
Justice Ministry spokeswoman Karen Temmink said Albayrak is studying the court ruling and drawing up answers to Van der Ham's questions.
Kazemi's case highlights not only the plight of homosexuals in Iran, but also differences in the way European Union allies deal with asylum seekers.
The Netherlands relaxes its tough asylum laws for Iranian gays - virtually guaranteeing asylum to any who apply here - because of persecution they face at home. Britain, on the other hand, rejected Kazemi's original asylum request.
Kazemi, 19, says he traveled to London to study English in 2005 and applied for asylum in Britain after learning that his lover in Iran had been executed for sodomy.
After British authorities rejected Kazemi's application, he fled to mainland Europe and applied for asylum in the Netherlands.
However, because Kazemi had already applied for asylum and been rejected in Britain, the Dutch government is refusing to consider his case and insists he must be sent back to Britain. It cites the European Union's 2003 Dublin Regulation, which declares that the member state where an asylum seeker first enters the EU is responsible for processing that person's claim.
Tuesday's court ruling upheld the Dutch position.
Palm said last week that Kazemi was in such despair he was on suicide watch in a center for rejected asylum seekers in the port city of Rotterdam.
Britain's Home Office has declined comment, saying it does not discuss individual asylum applications, but it is unlikely authorities would reverse their earlier rejection.
However, Britain's Border and Immigration Agency has issued a statement that could give Kazemi hope.
"We examine with great care each individual case before removal and we will not remove anyone who we believe is at risk on their return," the agency said.
Matteo Pegoraro, president of the Italian-based gay rights group EveryOne, which is lobbying for Kazemi, has said he knows of 10 gay people executed in Iran since 2005, based on reports from nongovernment groups and activists.