* Court rules deputy PM, 4 others other lawmakers ineligible
* Australian dollar falls a quarter of U.S. cent
* Decision means government loses its one-seat majority
* By-election to be held for deputy PM Joyce's seat (Recasts throughout after court decision rules deputy PM, four others ineligible for parliament, adds deputy PM quotes, background)
By Colin Packham
CANBERRA, Oct 27 (Reuters) - Australia's High Court ruled on Friday that Deputy Prime Minister Barnaby Joyce is ineligible to remain in parliament, a stunning decision that cost the government its one-seat parliamentary majority and forced a by-election.
The Australian dollar fell a quarter of a U.S. cent after the court announced its ruling and ordered that Joyce must seek a new mandate in his rural New South Wales state electorate.
That left Prime Minister Malcolm Turnbull's centre-right coalition in the precarious position of a minority government. Turnbull's Liberal Party is the senior party in a coalition with the smaller National Party, which Joyce led. 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.
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. 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.
"It is a tough game, politics," Joyce told reporters in the rural town of Tamworth in his electorate. "You take the hits and the sacrifices."
All seven lawmakers 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.
Australian Solicitor-General Stephen Donaghue had urged the seven justices of the High Court not to interpret the constitution literally. He argued that five of the seven, including three Cabinet members, should be cleared because they were unaware that they had contravened the constitutional requirement at the time. (Writing by Jane Wardell; Editing by Paul Tait)