The Court of Appeal ruled today that Health Secretary Jeremy Hunt does not have the power to implement cuts at the successful Lewisham Hospital in south east London.

Three judges announced their decision on the second day of a hearing in London.

Supporters of the highly-regarded hospital cheered when Lord Dyson, the Master of the Rolls, sitting with Lord Justice Sullivan and Lord Justice Underhill, gave their decision in an appeal brought by the Government over a High Court judge's ruling in July.

Mr Justice Silber had then ruled that Mr Hunt's move to downgrade A&E and maternity services was "unlawful".

Rosa Curling from law firm Leigh Day, who represented the Save Lewisham Hospital Group said: "We are absolutely delighted with the Court of Appeal's decision today. It confirms what the Save Lewisham Hospital Campaign has been arguing from the start - that the Secretary of State did not have the legal power to close and downgrade services at Lewisham Hospital.

"This expensive waste of time for the Government should serve as a wake up call that they cannot ride roughshod over the needs of the people.

"The decision to dismiss the appeal also reaffirms the need for judicial review, a legal process by which the unlawful decisions of public bodies, including the Government, can be challenged by the public. The Government's current consultation on the judicial review process is in direct response to these types of cases where it has acted unlawfully but does not want to be challenged by those who put them in power."

Quashing Mr Hunt's decision in July, Mr Justice Silber declared that he had breached provisions of the National Health Services Act 2006.

The ruling was a serious blow for Mr Hunt because the case involved the first legal testing of a new Government procedure for dealing with failing NHS organisations - referred to as the Unsustainable Providers Regime.

Under the new regime, Mr Hunt had appointed a Trust Special Administrator (TSA) to the "very badly performing" South London Healthcare Trust, which went into administration after it started losing more than £1 million a week.

To help deal with the problem, the special administrator recommended measures including cuts at Lewisham Hospital. Mr Hunt told Parliament in January that A&E and maternity services at the hospital would be downgraded.

Mr Hunt assured MPs the changes would improve patient care in south London, saving up to 100 lives a year, but gave an undertaking not to implement them pending the legal challenge.

At the Court of Appeal yesterday Rory Phillips QC, for the Health Secretary and the Trust Special Administrator, argued that they had not acted outside their powers.

He challenged Mr Justice Silber's findings that the TSA was not entitled to recommend the changes to the services at Lewisham and that Mr Hunt was not entitled to decide to implement them.

Referring to the 2006 Act, he said that its "wording, statutory context and purpose" should have led Mr Justice Silber "to conclude that they were entitled so to act, consistently with Parliament's evident intention".

July's ruling was won by Lewisham Council and the campaign, an umbrella group supported by patients, community groups, GPs, hospital doctors, nurses and other health professionals.

Andy Burnham MP, Labour's shadow health secretary, said: " This decision is a humiliation for Jeremy Hunt and raises major questions about his judgment.

"Instead of graciously accepting the first court ruling, he has squandered thousands of (pounds of) taxpayers' money trying to protect his own pride and defend the indefensible. He is diminished by this ruling and has let down the NHS.

"The court has done an important public service today in standing up to an arrogant and high-handed Government and a Secretary of State who is trying to close A&Es across London in the middle of the worst A&E crisis in living memory.

"Today, the Secretary of State must accept this decision, apologise unreservedly to the people of Lewisham and give an unequivocal commitment that their A&E will not now be downgraded.

" The message from the court today couldn't be clearer - Jeremy Hunt and the Conservatives simply can't be trusted with the NHS."

Vicky Penner, who has been involved in the campaign from the outset, was jubilant to be told by lawyers: "Lewisham is now safe and this case is now over."

The mother of three young children, aged two, three and six, said: "We are absolutely over the moon. We are thrilled that justice has prevailed for a second time.

"I was shocked that the Government was arrogant and foolish enough to carry on and try and bully through the closure of our excellent much-needed Lewisham Hospital.

"The judgment made in July was very clear indeed - that they acted unlawfully - so this is a disgraceful waste of taxpayers' money by Jeremy Hunt."

She said the Government had brought a last-minute amendment to the Care Bill giving trust special administrators (TSAs) much greater powers, which meant no hospital in the country would be safe and showed a " contempt for normal people and democracy".

"We are not against change in Lewisham but against the dangerous closure of vital services being rushed through without proper consultation."

Health Secretary Jeremy Hunt said: " I completely understand why the residents of Lewisham did not want any change in their A&E services, but my job as Health Secretary is to protect patients across south London - and doctors said these proposals would save lives.

"We are now looking at the law to make sure that, at a time of great challenge, the NHS is able to change and innovate when local doctors believe it is in the interests of patients."

Unite, the country's largest union with 100,000 members in the health service, called on the Health Secretary not to repeat the "legal fiasco" at other hospitals in England.

National officer for health Barrie Brown said: "For a Government that is cutting services for the most vulnerable in society, Jeremy Hunt's obsession with pursuing this case to the Court of Appeal, after he had lost in the High Court, is a flagrant waste of taxpayers' money.

"He refused to accept the High Court ruling this summer that he was acting outside his powers when he decided the emergency and maternity units should be cut back. Then, the judge ruled that local people would have to travel a long way to gain access to vital services.

"He needs to give a public assurance that he won't be repeating this ideologically driven fiasco at other hospitals in England. He should be putting patient care before Tory dogma.

"Unite would like to congratulate the Save Lewisham Hospital campaign and the local community who have campaigned so vigorously to expose the poverty of Hunt's policies."

Royal College of Midwives' director for policy, employment relations and communications Jon Skewes said: "We welcome this decision. We were deeply concerned about the consequences of Mr Hunt's decision for the remaining maternity services in south east London.

"London's birth rate is continuing to rise and the occasions when maternity units in the area have had to temporarily close or suspend services is worrying.

"It is important that as much maternity care is provided locally as is possible. This is a victory for mothers, babies and their families in south east London."