The Government said it would "vigorously" fight any move to introduce a "blanket ban on parental smacking".
The European Commission of Human Rights in Strasbourg, which vets all applications to the European Court of Human Rights, decided there is an issue to answer. A court ruling in favour of the boy is likely to limit parents' rights to use corporal punishment to discipline their children.
The Secretary of State for Health, Stephen Dorrell, said: "English law coincides with common sense. Parents are allowed to use corporal punishment but only to the extent of reasonable chastisement.
"The Government could not support a blanket ban on parental smacking as most people understand it."
Children's rights campaigners heralded yesterday's decision as a breakthrough. The challenge was mounted after the boy's stepfather was acquitted in 1993 of causing actual bodily harm in beating the child, then aged nine, with a garden cane after he threatened to stab another child.
Members of the jury were told that the boy, who cannot be named for legal reasons, was treated in hospital for injuries to his buttocks, thighs and calves. They delivered a not-guilty verdict after the judge advised them that the deliberate and unjustified hitting of another person causing bodily injury amounted to a criminal offence of actual bodily harm - but that it was a "perfectly good defence" that the alleged assault was merely the correction of a child by its parent, provided the correction was moderate "in the manner, the instrument and the quantity of it".
The boy now lives with his natural father whose joined application to take court action was found inadmissible yesterday.
The boy's 34-year-old mother, now married to his stepfather, has claimed in an interview that the child had "run riot" since the age of two and was "totally out of control". She said that she was "astounded" that the case was going ahead.
The boy's lawyers argue that the Government is in breach of the human rights convention, which outlaws "inhuman and degrading" treatment. They will argue when the case reaches the court - probably next year - that this includes the infliction of corporal punishment.
The Government's lawyers argued at yesterday's hearing that under English law parents can use corporal punishment but only to the extent of "reasonable chastisement". They pointed out that the jury in this particular case was not satisfied that the stepfather's conduct was unreasonable.
Officials at the Human Rights Court acknowledged that corporal punishment of all kinds could be called into question in Britain if the boy wins his case.
But a spokesman for the Department of Health said the Government did not have to impose a ban if the boy eventually won. Instead it could state stricter circumstances in which corporal punishment could be used.
Peter Newell, co-ordinator for Epoch (End Physical Punishment of Children), said: "This is a landmark decision for children - the first step towards confirming that children have the same rights as adults to protection from violence under the convention."
Family and Youth Concern, an anti-permissive pressure group, said it was disappointed by the move. "We defend families' right to discipline their children the way they feel is best. That might mean smacking as a last resort," Cornelia Oddie, a spokeswoman, said.Reuse content