The ABC has announced it will not appeal a Federal Court ruling that found a police warrant used to raid its Sydney headquarters was valid.
Australian Federal Police officers raided the public broadcaster's Ultimo office in June last year.
Police searched for computer files associated with a number of reports known as the Afghan files.
The 2017 stories centred on the alleged war crimes of Australian soldiers in Afghanistan, which were based on leaked documents from the Defence Department.
Officers seized 124 files on two USB sticks.
The ABC challenged the validity of the warrant in the Australian Federal Court, arguing it was "legally unreasonable".
The case was dismissed last Monday, and the ABC was ordered to pay the legal costs of all parties involved.
In a statement, the ABC's managing director David Anderson said the decision was a blow to media freedom, but that the broadcaster could not litigate its way to "reforming fundamentally bad laws".
"This outcome demonstrates the urgent need for law reform to ensure professional journalism and whistleblowers are appropriately protected," Mr Anderson said.
He said Australia was not up to the standard of other western democracies when it came to the protection of whistleblowers and public interest journalism.
"All Australians should be highly concerned at this outcome, the position the ABC has been put in and what this means for all journalists and the public's right to know."
ABC chairwoman Ita Buttrose challenged the nation's leaders' commitment to a transparent democracy.
"If our elected representatives in Canberra truly believe in Australia as a transparent democracy, it's time for them to show leadership and take action," Ms Buttrose said.
"Supporting media freedom doesn't mean making allowance for journalists to break the law — it means having laws that allow journalists to safely do reporting in the public interest."
She said no-one wanted Australia to be a "secretive state" where reporters and whistleblowers faced prosecution for stories the public had a right to know.
The AFP investigation into the reporting by Dan Oakes and Sam Clark is ongoing.