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, the Press Association reported.
The appeal court had been considering the Department of Energy and Climate Change's case against an earlier legal ruling that the planned change to the timing of the Feed-in-Tariff (FIT) subsidy was legally flawed.
In an effort to save money, the government proposed last October to halve FITs for solar plants for projects below 4 kilowatts installed after December 12.
The proposal left Britons wondering how much they would be paid for the surplus electricity generated by their panels and dealt a blow to companies installing them.