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Hi, my husband has British citizenship which he obtained in October 2009 but has not applied for his British passport yet, just a case not getting round to it. However a friend has told him today that he has to apply for his passport or lose his citizenship.

Is this correct and if so is there a time limit from when he gained citizenship to having to apply for his passport?

Thank you in advance

This is not true!
Your husband can live his entire life without applying for the passport and his citizenship will be just fine.

Attending the oath/affirm ceremony and receiving the certificate is the final part of the British naturalisation journey. Applying and receiving passport is just for the individual's necessity to use it for other purposes like travelling.

As above, it's absolutely not true. There is no requirement for a British citizen to hold a passport, and plenty don't.