But she was in fact declared illegitimate. She was styled the Lady Mary instead of Princess and she lost her place in the line of succession in favor of her newborn half sister Elizabeth. Her household was dissolved and she was forced to join Elizabeth's household. Since Mary refused to accept this change in status, her relationship with her father became very strained to the point where they didn't talk for years and he forbade her from visiting her ill and dying mother.

After Anne was beheaded Elizabeth was also declared illegitimate.

Jane Seymour tried to repair the relationship between Mary and Henry and it worked after Mary was finally pressured into signing a document declaring that she accepted her illegitimacy and her father the King as head of the church.

Edited: a missing word