American Amanda Knox and ex-boyfriend Raffaele Sollecito had been in court trying to persuade a judge in Perugia, Italy, to release them on bail.
Another man, Rudy Hermann Guede, is awaiting extradition from Germany while a fourth person, Diya "Patrick" Lumumba, has been freed but remains a suspect.
Knox cried in court as she declared she had nothing to do with the killing of 21-year-old Meredith.
Dressed in jeans and a plain sweatshirt and with no make-up, Knox sobbed: "I want to tell the truth. I'm sorry about Patrick.
"I'm sorry about the whole situation. I'm innocent. I was at Raffaele's house."
Her lawyer Luciano Ghirga said he had outlined his defence that she should be freed under "house arrest" because there was no evidence she was involved in the murder.
He said the DNA of Meredith and Amanda, 20, found on the knife was so "small as to be insignificant" and could have got there by a "variety of means".
He said: ''I told the court Amanda's declarations were not falsities or confessions.
By Sky News SkyNews - 41 minutes ago
A court has ruled that the two suspects in the murder of British exchange student Meredith Kercher must remain in jail.
''I also said that Amanda has always insisted that she was never at the house when Meredith was murdered.''
Prosecutor Giuliano Mignini also outlined his case as to why Knox should be kept inside Capanne prison.
Neither Knox or Sollecito saw each other at the hearing. Sollecito's appeal began immediately afterwards.
All four deny sexually assaulting and murdering the Leeds University student from Coulsdon, Surrey, on the night of November 1.
Miss Kercher was found with her throat slit and police said there was evidence of a violent sexual encounter.
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