Sharon Shoesmith, who was vilified after the death of the toddler Baby P, won her appeal yesterday that she was "unfairly and unlawfully" sacked.
As director of Haringey Council's children's services, she was the focus of public fury when it was revealed that 17-month-old Peter Connelly died of abuse despite extensive contacts with social workers, and was sacked by then Secretary of State for Children, Schools and Families Ed Balls.
Yesterday, the 58-year-old said she was "over the moon and absolutely thrilled" after three appeal court judges ruled that her position did not mean that her "head must roll" without a fair hearing. She could now receive as much as £1 million in compensation.
Lawyers for the Department of Education and Haringey Council immediately said they would seek to challenge the court ruling that her dismissal was "procedurally unfair" in the Supreme Court.
Mr Balls said yesterday that he strongly disagreed with the court judgement, adding: "A little boy, Baby Peter, was cruelly abused by his mother and her partner and died from his injuries after great suffering. He was badly let down by all those who were responsible for his safety.
"My response to the huge torrent of public outrage was not to rush to judgement, but instead to commission (an independent) report ...when it was presented to me, (it) catalogued catastrophic management failures on such a devastating scale.
"I judged, on the basis of that independent report – and on the advice of departmental officials and lawyers – that the right and responsible course of action was for me to use my statutory powers to remove the Director of Children's Services from her position with immediate effect."
Appeal judges allowed Ms Shoesmith's challenge against a High Court ruling that cleared Mr Balls and the local authority of acting unlawfully when she was dismissed. Her appeal against regulator Ofsted was dismissed. Lawyers argued that Ms Shoesmith – who was sacked in December 2008 after a damning Ofsted report exposed failings in her department – had been the victim of "a flagrant breach of natural justice" as she was driven from her £133,000-a-year post by a media witch hunt and political pressure.
She asked the judges to rule that her sacking without compensation was legally flawed and that she remained entitled to her full salary and pension from Haringey up to the present day.
The judges said they were allowing Ms Shoesmith's appeal because she was denied "elementary fairness" when Mr Balls did not afford her "the opportunity to put her case".
"We rejected a submission on behalf of the Secretary of State that the situation was too urgent to permit the adoption of a fairer procedure," they said, adding: "We were unanimously of the view that Haringey's procedures were tainted by unfairness."
Outstanding questions over the "remedy" would be sent to the High Court for consideration.
The judges emphasised that it was not for them "to express any view on whether Ms Shoesmith should or should not have been removed from office" or on the extent to which she was "blameworthy", if at all.
Outside court Ms Shoesmith said: "My sorrow about the death of Peter Connelly in Haringey when I was director is something which will stay with me for the rest of my life. But as the judges have said, making a 'public sacrifice' of an individual will not prevent further tragedies."
Peter's mother Tracey Connelly, her boyfriend Steven Barker and Barker's brother Jason Owen were acquitted of murder and manslaughter at a trial in November 2008 but convicted of causing or allowing Peter's death contrary to section 5 of the Domestic Violence, Crime and Victims Act 2004.
* Today Ms Shoesmith repeated her position, saying that she could not control every aspect of public agencies' involvement with abused children.
"As a director of children's services I cannot control what the police do, I cannot control what health does. I cannot control the fact that when a social worker rings to get an appointment at a hospital she cannot get it for four months,
"I cannot control the fact when a social worker is referring a child for abuse that she rings up and finds that a case has not been allocated to a police officer for four months. I can't control those matters, this is much more complex than saying you are responsible, let's sack you and the whole nation will be at peace."
Speaking to BBC Radio 4's Today programme, she added: "You cannot stop the death of children." She refused to say what level of compensation she had in mind.