Delon, 63, had tried to stop the book from even being researched or written, which would have created a draconian precedent in French libel and privacy laws. His suit, against the respected, investigative author, Bernard Violet, was supported by an earlier court judgment and by the French state prosecutor.
But the Tribunal de Grande Instance ruled that it had no power under French law to ban a book before a word was written. Mr Violet's lawyers said he would now go ahead with the project. He expected to publish the book, investigating Delon's alleged links with organised crime, the extreme right and the security services, in about two years' time.
Earlier, Delon, who played tough-guy roles in seminal French movies of the 1960s and 1970, announced once again that he was retiring from the cinema and probably the theatre.
"Everywhere you look, all that's left is the American cinema and American TV movies," he said. "I'm French and have no intention of becoming American at my age ... So there's bugger all left for me to do."
This is not the first time he has announced his retirement from the screen but it was, perhaps, the most emphatic.
The proposed biography will explore the evidence that Delon's success in portraying romantic tough-guys in the cinema was rooted in personal observation. It is well- known that Delon has cultivated friendships with criminals since his youth, but no one has successfully explained why.
Mr Violet insists he wants to write a broadly positive book about Delon as one of the great figures of post-war French cinema. But he also wants to explore the shadows in Delon's life: his admitted friendships with crooks; his close relationship with the Yugoslav hoodlum, Stefan Markovic, whose still unexplained murder in 1968 caused a political scandal in France; his declared admiration for, and contacts with, the French far right, including the National Front leader, Jean-Marie Le Pen; his links with the French security services; and - in so far as privacy laws permit - his energetic love life.
Delon learnt of the project when the publishers sent an 18-page proposal or synopsis to his lawyers.
Mr Violet, the intending author, sued the publishers, Grasset, for breach of confidence. He also cross-sued Delon for calling him a "potholer of dustbins and investigator of gutters". He lost both these cases yesterday but won the right to go ahead with his book.
Mr Violet told The Independent, before the judgment, that the case was a crucial test case for freedom of speech in France. If Delon won, he said, it would no longer "be possible to publish an honest biography of a living person in France". It would be possible only "to publish authorised biographies, with all that means in terms of being rose-tinted, soft, uncritical and flabby".
Delon objected to the proposed book on two grounds. Firstly, he claimed it would infringe his right to privacy, guaranteed by French law; secondly, he said that many of the allegations in the synopsis were inaccurate and defamatory.
If he had won his case, it would have been impossible for Mr Violet to continue his work and discover whether the allegations were inaccurate or not.
The author's lawyers argued during a court hearing this month that such a ban would amount to a serious restriction on the freedom of speech and liberty of the press (first declared in France in 1793).
Journalists and authors must be accountable in law for what they have written, the lawyers said; but punishing them for what they might write would establish a new and dangerous principle and take France into the realms of third-world justice.
t Thousands of French police demonstrated against government plans to redeploy some of their forces from peaceful areas to crime hot spots. Under the terms of the proposals, the national police will take over duties from the paramilitary police, the gendarmerie, in 38 areas, mostly tough suburbs.Reuse content