A by-election has been ordered following the court ruling.
Australia’s constitution bars dual citizens from sitting in parliament, defining them as “any person who is under any acknowledgment of allegiance, obedience, or adherence to a foreign power”.
The court announced its ruling and immediately the Australian dollar fell against its US counterpart as the Government is thrown into a crisis.
The decision leaves Prime Minister Malcolm Turnbull’s centre-right coalition in the precarious position of a minority Government.
Mr Turnbull’s Liberal Party is the senior party in a coalition with the smaller National Party, which Mr Joyce led.
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The Prime Minister must now win the support of one of three independent lawmakers to keep his minority government afloat, with two sitting weeks of parliament left until it recesses for the year.
Mr Joyce was one of seven politicians whose eligibility to sit in parliament was thrown into doubt in recent months when it was found they were dual citizens, which bars them from being elected to the national parliament under Australia’s constitution.
The former deputy Prime Minister, who renounced his dual New Zealand citizenship in August, said he would stand in the by-election, which is likely to be held in early December.
Mr Joyce said: ”It is a tough game, politics.
“You take the hits and the sacrifices.”
All seven lawmakers embroiled in the scandal accepted they were dual nationals when they were elected last year but had claimed they were unaware of their status at the time.
Some were conferred a second nationality by birth, others by descent.
Of the remaining six, who were from the coalition and minority parties, four were also found ineligible to hold parliamentary office.
Some had already resigned. All were senators, which meant seats in the upper house of parliament could be assigned to party alternatives if they were ruled ineligible.