The Government has lost its bid to overturn a High Court ruling that its plans to cut subsidies for solar panels on homes are unlawful.
The Court of Appeal rejected Energy Secretary Chris Huhne's claim that he had the power to go ahead with the controversial scheme.
Opponents say, if allowed, the proposals would put 29,000 jobs in the solar industry at risk. They say projects have already been abandoned and jobs lost because of the current uncertainty.
Mr Huhne wants to reduce feed-in tariff subsidies (FITs) - payments made to households and communities that generate green electricity through solar panels - on any installations completed after December 12 last year.
High Court judge Mr Justice Mitting ruled that it would be unlawful to implement plans to approve the cuts in April this year by referring back to the December 12 deadline. The deadline fell 11 days before the end of a consultation period on the proposals.
The appeal court's unanimous decision was a victory for environmental campaigner Friends of the Earth (FoE) and two solar companies - Solarcentury and HomeSun - which said the plans to halve subsidies were creating "huge economic uncertainty".
They say they want the Government to establish a fairer system that enables feed-in tariff payments to fall in line with the falling cost of solar technology, but in a way that supports the continued growth of the solar industry.
HomeSun chief excutive Daniel Green welcomed the ruling, saying: "Both this appeal and the judicial review in the High Court would not have been required had the Department for Energy and Climate Change (DECC) simply followed its own process and allowed the industry, that it claims to support, time to prepare for a lower feed-in tariff."
Energy and Climate Change Secretary Chris Huhne later confirmed he would seek to appeal further, saying: "The Court of Appeal has upheld the High Court ruling on FITs albeit on different grounds. We disagree and are seeking permission to appeal to the Supreme Court.
"We have already put before Parliament changes to the regulations that will bring a 21p rate into effect from April for solar PV installations from 3 March to help reduce the pressure on the budget and provide as much certainty as we can for consumers and industry. We want to maximise the number of installations that are possible within the available budget rather than use available money to pay a higher tariff to half the number of installations."
© 2012 Press Association