Mr Justice Maurice Kay ruled that the Government had failed properly to apply the European Union Habitats Directive and wrongly restricted its impact to territorial waters extending only 12 nautical miles from the coast. The judge said the directive applied up to 200 nautical miles from the mainland - affecting areas due to be explored for oil and gas.
The judge ruled that the Government cannot lawfully grant oil exploration licences without considering possible harmful effects on wildlife, as required by the directive.
Lord Peter Melchett, Greenpeace executive director, said: "It is a huge victory for whales, dolphins and other wildlife in the Atlantic. It means wildlife is going to be protected and the Government is going to have to act."
However, the judge gave the Government permission to challenge his decision in the Court of Appeal.
The ruling is a blow to 10leading gas and oil companies, which joined Stephen Byers, Secretary of State for Trade and Industry, in opposing the Greenpeace application. But it will be warmly welcomed by the World Wide Fund for Nature, the Whale and Dolphin Conservation Society and the Royal Society for the Protection of Birds, which supported Greenpeace.
During a four-day hearing, Greenpeace accused the Government of failing to take steps to safeguard "vulnerable jewels of the natural world".
Nigel Pleming QC, for Greenpeace, said the area contained reefs of the rare and beautiful deep-water coral Lophelia pertusa, which supported a rich variety of life. Oil and gas deposits were thought to exist under the sea bed and the area was now at the centre of proposals for a new round of licensing for oil exploration and production.
Mr Justice Kay accepted that the Government had "failed to give full effect" to the EU Habitats Directive and must now fully take it into account. Oil companies fear the ruling could lead to delays and added costs in exploring for oil in the area, but Greenpeace said the area was "the most important in Europe" for whales and dolphins.