Disabled people threatened by the government's decision to scrap a fund providing vital assistance won a big victory yesterday when it was ruled unlawful by the Court of Appeal.

The case was brought by five disabled users of the independent living fund (ILF), which currently provides support enabling nearly 20,000 disabled people to live independent lives.

The High Court had previously ruled that the government's decision to axe the fund was lawful.

But lawyers acting for the five - Gabriel Pepper, Stuart Bracking, Paris L'amour, Anne Pridmore and John Aspinall - argued that the Court had gone wrong in law and that there had been a lack of proper consultation.

Appeal judges Lord Justice Elias, Lord Justice Kitchin and Lord Justice McCombe allowed the challenge and quashed the High Court decision.

The judges unanimously found that the government had breached its legal duty to properly assess the affect of the fund's closure on the disabled under the 2010 Equality Act.

The panel heard that loss of the fund could make it impossible for many disabled people to continue to live independent lives and in many cases it would affect their ability to work.

David Wolfe QC, appearing for the five, successfully argued that documents presented to Minister for Disabled People Esther McVey did not give a true flavour of the impact of the fund's closure on the ability of users to live independent lives and "represented a failure by officials to inform the minister of the true level of the threat."

Lord Justice Elias agreed. He said: "Any government, particularly in a time of austerity, is obliged to take invidious decisions which may exceptionally bear harshly on some of the most disadvantaged in society."

Its duty to consider the equality impact of decisions "does not curb government's powers to take such decisions, but it does require government to confront the anticipated consequences in a conscientious and deliberate way," he said.

Lawyers for the five claimants hailed the ruling as "of major importance not just for the claimants but for all disabled people."