The High Court has ruled in favour of redistributing some fishing rights from big producers to small-scale fishermen.
The UK Association of Fish Producer Organisations had challenged a decision to reallocate unused quota, essentially a licence to fish, worth more than £1m.
It argued the move was unlawful under both EU and domestic law, but the judge ruled there was no discrimination.
Jerry Percy, who represents some of the small-scale producers, said the decision had "historic implications".
Fishing quotas, allocated by the EU, provide a permit for those making a living from the seas. Without them, it is not possible to legally catch and sell fish.
Members of the UK Association of Fish Producer Organisations (UKAFPO), mainly large-scale fishermen, currently control more than 90% of the overall fishing quota for England and Wales.
Small-scale inshore fishing around the UK's traditional ports has suffered because crews have been unable to negotiate control of enough of the quota to stay in business.
But large fleets have left about 800 tonnes of their quota untouched for years, so the government decided to confiscate that amount of the quota to share out among small operators.
The Department for Environment, Food and Rural Affairs (Defra) wants to redistribute "fixed quota allocations" from those who own vessels greater than 33ft (10m) to boats that are 33ft or under.
Mr Percy, chief executive of the New Under Ten Fishermen's Association Ltd (Nutfa), told the BBC the decision was good news for the long-term survival of small-scale fishermen, who could now catch more fish.
The redistribution would involve "constantly unused quota", he said.
"We have had an ongoing imbalance in quota allocation for decades which has resulted in the fact that while we are three-quarters of the commercial fleet in the UK, we have access to only 4% of the quota," he added.
Nutfa and environmental campaign group Greenpeace have argued that fish stocks are not "a private commodity but a public resource, held by the Crown for the benefit of the public".
Jim Portus, UKAFPO chairman, said his organisation was very disappointed by the decision, but said he was pleased the judge had recognised the fixed quota allocations held by each boat were "possessions" as far as the Human Rights Act was concerned.
He added: "We have considered an appeal and we may be returning to the High Court in the autumn."
Tom de la Mare QC, for UKAFPO, told the court the entire fishing industry had operated for more than 13 years on the strength of government assurances that were now being broken, stressing that it was not for Defra to cancel certain fixed quota allocations and not others.
One assurance had been that there would be no adverse consequences for any producer who under-fished a yearly quota, he said.
Mr de la Mare added that the under-10m owners had almost been "romanticised as a community of fishermen - Peter Grimes-type operators".
But on the evidence, well over half of the boats were "souped-up vessels adjusted to come in just under the 10-metre limit", he said.
Fisheries Minister Richard Benyon said the court had "vindicated" his decision to reallocate underused quota, and said "putting fishermen at the heart of the decision is good news".
He added: "I will continue to take action to maximise the value of the UK's fishing quotas and I look forward to working with all parts of the industry to determine the best way we can do this."