A government scheme that left many defendants having to pay to clear their name in court has been ruled unlawful.
Regulations introduced last autumn limited the costs awarded to people who funded their own defence to the same as for those on legal aid.
However, the High Court said it meant "that a defendant falsely accused by the state will have to pay from his own pocket to establish his innocence".
The judges quashed the rules, saying they were legally flawed.
Labour ministers, looking to save money from central funds, had argued it was reasonable to limit the amount that could be awarded to the defendants, which meant they would not receive the full amount spent on clearing their names.
Lord Justice Elias, sitting with Mr Justice Keith, said that was "a decisive departure from past principles".
He said they rejected the idea "that a defendant ought not to have to pay towards the cost of defending himself against what might in some cases be wholly false accusations, provided he incurs no greater expenditure than is reasonable and proper to secure his defence".
Lord Justice Elias said: "Any change in that principle is one of some constitutional moment."
The ruling means the funding issue will now have to be reconsidered by Parliament, subject to any appeal.
Current Lord Chancellor and Justice Secretary, Kenneth Clarke, had resisted the application by the Law Society of England and Wales for a judicial review.
'Out of pocket'
After the ruling, society president Robert Heslett said: "This is a great victory for the society on behalf of innocent people who have been prosecuted by the state.
"The High Court's ruling strikes down the previous Lord Chancellor's plans, which would have meant that many people who were ineligible for legal aid and who were acquitted could have been seriously out of pocket because of the limits on the costs that they could recover."
The Ministry of Justice said it was "disappointed" and was now considering "the appropriate next steps".
A spokesman said: "It is crucial for government to achieve value for public money, particularly in the current economic climate.
"The scheme was designed to prevent spiralling legal costs while still ensuring access to appropriate legal support, and so we are disappointed with the ruling that the scheme cannot continue."