Michael Howard's "reasoning" behind his refusal to allow a parole application by Prem Singh - jailed more than 20 years ago for the murder of an elderly woman - fell "well below" standard, said Lord Justice Pill and Mr Justice Keene.
In a ruling which could lead to freedom for Singh, now aged 37, the judges quashed Mr Howard's decision not to allow him parole and said the Home Secretary will have to reconsider his finding that he still posed a risk to the public.
But the case of Singh, who was 15 at the time of his conviction, also has far wider implications for Mr Howard's criminal justice policy relating to juveniles.
Last year, Singh and another youth won a unanimous decision by the 18 members of the European Commission on Human Rights which removed ministers' powers to fix the sentence for all juvenile murderers who are ordered to be detained "at Her Majesty's Pleasure".
If, as is likely, it is upheld by the European Court in Strasbourg, the ruling will force the Home Office to review the sentences of up to 400 young offenders detained for murder - and in many cases reduce them. They include the two 11-year-olds who killed the Liverpool toddler, James Bulger.
In the case of the two, Jon Venables and Robert Thompson, the Home Secretary set their sentence at 15 years - higher than the eight-year sentence handed down by the trial judge and that of 10 years recommended by Lord Taylor, the Lord Chief Justice.
Mr Howard is expected to contest the commission's ruling when the case comes before the European Court in the autumn.
The Home Secretary has suffered several defeats at the hands of the judiciary in recent months - most recently his proposals to introduce a new fixed- price scheme for compensating the victims of crime, now under review by the Law Lords and over the way he has been reviewing miscarriage-of- justice cases.
The court heard yesterday that Singh was ordered to be detained at Her Majesty's Pleasure in 1973 after killing Edith Booth, 72, at her Bradford home and was released on licence in 1990. He was recalled to prison in 1991 following his arrest on allegations of fraud and threatening behaviour which were later dropped - and also for deceiving his probation officer.
In 1993, faced with a possible High Court action, the Parole Board, which had initially refused to recommend his parole, relented. Singh thought his release was imminent, but Mr Howard vetoed the recommendation, saying he was "not yet satisfied that you [Singh] are not a risk to the general public".
The judges said yesterday that the Home Secretary had failed to justify or properly explain his conclusion.
"Singh is entitled to and did not receive an explanation as to how that conclusion was reached on the basis of the material before the Home Secretary", they said.
The judges said they understood the difficulties the Home Secretary faced and the "grave responsibility" he bears in carrying out the task of deciding whether or not someone convicted of murder should be released. "However, the reasoning in this case falls well below the standard which an applicant is entitled to expect."Reuse content