A coalition of local councils, green groups and residents argued that the expansion decision was at odds with the UK’s overall climate change targets.
The coalition includes six local authorities, Greenpeace and the Campaign to Protect Rural England (CPRE).
Today Lord Justice Carnwath, sitting in London, upheld their argument that the Government's policy support for a third runway, made in 2003 and confirmed in January last year, will need to be looked at again, particularly in respect of climate change policy and surface access.
The coalition said in a joint statement that the Government’s Heathrow policy "is in tatters this morning".
The statement said: "If the Government wants to pursue its plans for Heathrow expansion, it must now go back to square one and reconsider the entire case for the runway."
Hayes and Harlington Labour MP John McDonnell , who has led the campaign against the expansion of Heathrow for the last 30 years, said: "In essence, this judgment means that the game is up for a third runway at Heathrow and I am calling upon the Government to accept the inevitable and lift this threat to my community."
He went on: "What we need now is a sensible approach to developing a sustainable transport policy based upon high-speed rail.
"This judgment is a victory. It means that whichever party is in government, they will not now be able to force through Heathrow expansion."
But Transport Secretary Lord Adonis reaffirmed the Government’s support for expansion, saying he welcomed the court’s ruling.
It does not rule out a new runway but calls for a review "of all the relevant policy issues, including the impact of climate change policy".
Lord Adonis said: "Heathrow is Britain’s principal hub airport. It is vital not only to the national economy but also enables millions of citizens to keep in touch with their friends and family and to take a well-deserved holiday.
"The airport is currently operating at full capacity.
"A new runway at Heathrow will help secure jobs and underpin economic growth as we come out of recession. It is also entirely compatible with our carbon reduction target, as demonstrated in the recent report by the Committee on Climate Change."
He went on: "The Government confirmed support for expansion at Heathrow only after detailed assessment showing that the strict environmental limits set for expansion could be met. In parallel, we announced measures which will give the UK one of the toughest environmental regimes of any country in the world."
Shadow transport secretary Theresa Villiers said: "Labour’s flagship transport policy is in complete disarray. This judgment is a damning indictment of Labour’s wholly misguided support for a third runway.
"It is proof that they cannot be trusted to safeguard our environment and that the whole handling of this hugely important issue has been riddled with incompetence and duplicity. They must drop their support for a third runway now."
She went on: "There will be a clear choice at the general election between five more years of Gordon Brown and his exhausted Labour Government or change with the Conservatives who will stop this runway from being built. Today’s news shows that the Conservatives made the right judgment and Labour got it wrong."
Uxbridge MP John Randall (Con) said: "This is extremely good news- it seems to me the plans are in complete disarray. I think it shows Government support has had to be done by methods that were totally flawed.
"It is a victory for local authorities, protestors and particularly local residents.
"However I would say before the people of Harmondsworth and Sipson can sleep easy, the only way to finally kill this off is to have a conservative government that will rule it out once and for all."
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