Relatives of people killed in the July 7 attacks will not receive public funding to oppose a Government application to have some of the evidence heard in secret.
Representatives of Home Secretary Theresa May will appear at the High Court next Thursday as they seek a judicial review of a decision by coroner Lady Justice Hallett not to allow closed evidence.
One group of families whose loved ones were killed in the 2005 London public transport atrocities said the Legal Services Commission has told them they do not qualify for legal aid.
Relatives faced a similar battle for funding at the inquests themselves after the previous Government invited applications and turned them down, before a decision was finally made in their favour.
Solicitor Clifford Tibber, who represents the families of six victims, said Mrs May has refused to rule out claiming costs against relatives if her application is successful.
He said: "Here we go again. The Government and the coroner both have public funding to argue about how evidence can be received but the people to whom it matters most, the bereaved families, are left without funding.
"It is a ridiculous system. The families are funded to be represented at the inquests but as soon as there is a challenge to the coroner's ruling they are left high and dry.
"I thought this was about open justice but now it seems to be more about getting any sort of justice."
Graham Foulkes, whose 22-year-old son David was killed at Edgware Road, said: "We are already suffering considerable distress and pain going through the inquests.
"That distress has been added to by the Home Secretary's appeal which we find very hurtful.
"It is unbelievably painful to be told that the Government are refusing to help us fight for open justice by refusing to fund our legal team and then exposing us to the spectre of bankruptcy if we have to fund it ourselves."
The legal move comes after Lady Justice Hallett rejected arguments by lawyers for MI5 that she had powers to exclude the bereaved families from hearings so she could examine sensitive documents.
The Home Office has said it welcomes the inquests but will not put lives at risk or undermine national security by failing to protect sensitive material.
The inquest at the Royal Courts of Justice in London is at the end of its fifth week and is expected to last up to five months.
A Legal Services Commission spokesman said: "By law, the Legal Services Commission cannot waive the financial eligibility and legal merits tests which we must apply to all civil legal aid applications.
"Exceptional Funding, which is a separate funding regime, cannot be granted to cover this type of judicial review."Reuse content