Samira Ghorbani Danesh fled Iran in 2009 and has been living in a women's shelter in northern Bavaria since.
She now has until the end of July to leave, Die Welt newspaper said on Thursday as the Federal Office for Migration and Refugees refused the 24-year-old asylum.
Danesh is appealing the decision after being told by the Bayreuth administrative court that “she was unable to make the danger she would face in Iran believable” and that she should return and live a “reserved lifestyle like other Iranian homosexuals.”
Yet in Iran, gay women are punished with 100 lashes – and can face the death penalty if convicted a fourth time.
It is common for homosexuals to flee the country, Iranian activist Katayun Pirawardi told the paper. “Those who can, escape to somewhere.”
“The judge in Bayreuth had doubts about her story of being prosecuted,” a spokesman told Die Welt. This means that if her appeal is rejected again, Danesh have to return this summer.
“Why would I make something like that up and have to leave my friends and family?” said Danesh.
A qualified architect, Danesh fled to Germany after a party she was at with other gay friends was raided by the country's secret police.
She managed to escape and hide in a neighbouring flat, but many of the young people who were caught, were taken away. It was the last time she saw her then long-term girlfriend.
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Despite her appeal being rejected, Danesh's lawyer has re-applied for asylum and is hopeful that the media attention the case is receiving will act in her favour as after being “outed” in the German press, living secretly in Iran would become considerably more difficult.