Five law lords unanimously overturned a Court of Appeal ruling that East Sussex County Council was entitled to make the reductions in the case of 16-year-old Beth Tandy, fromLewes, following cuts to its education budget.
Beth, who is sitting GCSEs, stopped attending school because of myalgic encephalomyelitis - ME - in February 1992 and was given five hours' home tuition a week. But the education authority, which had to find ways of making savings of more than pounds 3m, decided in September 1996 to cut the time to three hours.
Yesterday the House of Lords ruled that the county council had not been entitled to take into account the scarcity of its resources when fulfilling its statutory duty to provide "a suitable education" for Beth.
Lord Browne-Wilkinson said the council was under a duty under section 19 of the 1996 Education Act to make tuition available for children who were absent from school because of illness.
He said: "To permit a local authority to avoid performing a statutory duty on the grounds that it prefers to spend the money in other ways is to downgrade a statutory duty to a discretionary power. If Parliament wishes to reduce public expenditure on meeting the needs of sick children, then it is up to Parliament so to provide."
However, he expressed sympathy for the county council: "Like all other local authorities, [the council] is in an unenviable position. It is now prevented from obtaining either from central Government or from local taxation the financial resources necessary to discharge its functions as it would like to do.
"In a period when the aim of central Government, of whatever political colour, has been to achieve a reduction in public spending, local authorities have not been relieved of statutory duties imposed upon them by Parliament ... when different attitudes prevailed."
Later, Beth's solicitor, William Garnett, said: "This is great news for vulnerable members of society who are beneficiaries of statutory duties.
"It is also a marvellous victory for Beth. It is an achievement she will value all her life."
Throughout her long battle in the courts, Beth has continued to receive her full five hours' home tuition per week pending today's ruling. The education authority's statutory duty to Beth comes to an end next month because of her age.
East Sussex County Council said in a statement: "We are reviewing our policy in the light of today's announcement ...It is of national importance and has implications for all local authorities."
The ME Association welcomed the ruling. It said: "This is a victory for common sense."