The education secretary’s decision to axe 58 school projects worth £1bn in six local authority areas was ruled unlawful because he failed to consult properly with councils.
A High Court judge ordered that Michael Gove must now reconsider the decision.
Justice Holman said that in five of the cases, the failure was “so unfair as to amount to an abuse of power”.
The six councils that brought the case declared the ruling a “victory for common sense and fair play”.
But it is unlikely the projects planned by Waltham Forest, Luton Borough Council, Nottingham City Council, Sandwell, Kent County Council and Newham will be written back into spending budgets.
Critically the judge ruled that the final decision on the future of any project still lay firmly in the hands of the education secretary
Leader of Waltham Forest Council Chris Robbins said: “They must now make a decision on our funding based on the real evidence about the difficulties our schools face.
“We have said all along that we want to sit down and have an amicable discussion with the government about the difficulties our schools face.”
A spokesman for the Department for Education said: “The Secretary of State will now look again at his decision with regard to these authorities with an open mind, taking representations from them.”
But he added: “On the substantive points the judge concluded that it was a rational decision and that the authorities involved had no expectation of being allowed to proceed with their projects.”
He also pointed out that the judge had concluded that “there was no promise or expectation” that any of the claimants’ projects would proceed.