Hong Kong's government on Tuesday launched an appeal against a landmark court ruling which grants thousands of foreign maids the right to seek permanent residency in the southern banking hub.

Government counsel David Pannick told the Court of Appeal the original ruling restricted the authorities' ability to determine who could permanently reside in Hong Kong, and should be reversed.

The High Court ruling on September 30 gave Philippine domestic worker Evangeline Banao Vallejos the right to request permanent residency status, something that had been denied to foreign maids until then.

"It is our respectful submission that (this) decision was wrong as a matter of law," Pannick said at the outset of the hearing.

He said the city authorities should be given some discretionary power to decide who was eligible for residency, rejecting arguments that restrictions on maids were unconstitutional and discriminatory.

"There is no undermining of the rule of law if the legislature enjoys a certain margin of discretion," he told the court.

Most foreigners can apply to stay in Hong Kong after seven years of uninterrupted residency, gaining access to voting rights, benefits such as public housing and the right to live in the Chinese city without a work visa.

But those rights had been denied to the city's 292,000 foreign maids, mostly from the Philippines and Indonesia, until Vallejos won her court challenge last year.

High Court Justice Johnson Lam ruled the law unconstitutional in a decision that sharply divided opinion in the southern city of seven million people.

Officials warned it could open the floodgates to hundreds of thousands of residency requests from maids, some of whom have lived in Hong Kong for decades.

Vallejos's lawyer, Mark Daly, said the 59-year-old mother-of-five had yet to be granted permanent residency due to the ongoing legal dispute. She has lived in Hong Kong since 1986.

Filipino Migrant Workers' Union vice-chairman Eman Villanueva accused the government of discriminating against foreign domestic workers.

"On our part, it's disappointing not because the government is appealing but from the beginning they expressively said that foreign domestic helpers should not be given the same right," he told AFP outside the court.

A small group of people protested at the court against the extension of residency rights to domestic workers. They called for Beijing to intervene and waved banners warning about a flood of residency claims.

In October Justice Lam dismissed a government request for the court to grant a stay on the processing of residency applications from domestic helpers pending the outcome of the appeal.

Predictions of a deluge of permanent residency requests have proved unfounded, according to official figures of applications received from 1998 to 2011.

Foreign maids in Hong Kong earn a minimum wage of HK$3,740 ($480) a month and receive other benefits such as one guaranteed day off a week, but rights groups say they still face discrimination and a lack of legal protection.

Many live with their employers for years and send portions of their monthly pay back to their relatives at home, providing a huge source of foreign remittances to the Philippine and Indonesian economies.

Top officials have not spoken of maid migration as an answer to Hong Kong's low birth rate and ageing population, in the way they have described the children of mainland Chinese women born in the city.

The hearing has been scheduled to run until Thursday.