Soldiers serving abroad are protected by Human Rights laws, the Court of Appeal ruled in a controversial landmark judgment.
Three judges, headed by the Master of the Rolls, Sir Anthony Clark, dismissed challenges by the Government to High Court rulings over the death of Private Jason Smith, who died in Iraq while serving with the Territorial Army.
Permission to take the case to the House of Lords was granted on condition that the Secretary of State for Defence pays the legal costs whether they win or lose.
Solicitor Jocelyn Cockburn, who represents the family of Pte Smith, said: "We are absolutely delighted by the outcome which has the logical conclusion that, like all other citizens of the UK, soldiers have the protection set out under the Human Rights Act.
"The proposition of the Ministry of Defence that these rights should be removed from them when they are deployed abroad on active service doesn't reflect well on our Government."
Lawyers for Defence Secretary John Hutton had urged the judges to overturn a ruling by Mr Justice Collins in April last year that sending soldiers out on patrol or into battle with defective equipment could amount to a breach of their human rights.
The case was originally brought by the Ministry of Defence over comments made by a coroner after an inquest on Pte Smith, 32, who died of heatstroke in Iraq in 2003.
Andrew Walker, the assistant deputy coroner of Oxfordshire, recorded at his inquest in November 2006 that Pte Smith's death was caused "by a serious failure to recognise and take appropriate steps to address the difficulty that he had in adjusting to the climate".
The MoD conceded that Pte Smith was within the jurisdiction of Europe for human rights purposes because he died while in hospital at a UK base in Iraq.
But government lawyers challenged Mr Justice Collins's ruling on an issue of general principle - that members of the armed forces always remained within the jurisdiction of the UK for the purposes of the European Convention on Human Rights when operating abroad.
They argued that the judge made a mistake in assuming that a state might be in breach of its human rights obligations if it could have taken steps to avoid or minimise a known risk to life but did not do so.
While it was not disputed that a state had a general responsibility for the well-being of its armed forces, to suggest that it might be in breach of human rights obligations on each occasion that it did not provide a soldier with optimal equipment would impose a "wholly unreasonable and disproportionate obligation", it was contended.
Sir Anthony said the Defence Secretary had conceded before the hearing that soldiers who die on a UK base, like Pte Smith, are covered by human rights laws.
But he said proceedings in the High Court "took an unusual turn" when the judge concluded that soldiers are subject to UK jurisdiction throughout Iraq, not only when they are at a UK base or hospital.
Mr Justice Collins ruled that he was not bound by a finding at the House of Lords that soldiers were not so covered.
Sir Anthony said the Equality and Human Rights Commission had put it succinctly when it argued that there was no question that members of the British armed forces are subject to UK laws wherever they are.
"Soldiers serve abroad as a result of, and pursuant to, the exercise of UK jurisdiction over them.
"Thus the legality of their presence and of their actions depends on their being subject to UK jurisdiction and complying with UK law.
Pte Smith was deployed to Iraq in June 2003. He repeatedly told medical staff he was feeling seriously unwell due to the temperature, which was over 50C, before reporting sick in August 2003. Four days later he was found lying face down, short of breath, confused and behaving erratically.
He was taken the A&E, but sustained a cardiac arrest and was pronounced dead from hyperthermia within an hour.
Following a coroner's inquest into her son's death, during which the family were initially denied access to crucial documents, Catherine Smith sought judicial review.
The High Court ruled that the Human Rights Act applied to all armed forces personnel serving outside the UK, whether or not the death took place on a military base.
Armed Forces Minister Bob Ainsworth said: "We are surprised and disappointed by this judgment.
"While it does not affect the position concerning Pte Smith, it potentially has very serious implications for the ability of our forces - and those of our allies - to conduct military operations overseas.
"We are studying the judgment's implications for our forces and considering whether to appeal to the House of Lords.
"In the meantime, we await a date for a fresh inquest into the death of Pte Smith and will as usual offer the coroner our full co-operation."
Sir Anthony said lawyers for the Defence Secretary had argued during the March hearing of the case that the court was bound by the House of Lords decision.
But he said that case heard by the Law Lords involved a different point.
At the end of the judgment, Sir Anthony said the precise limits of the new inquest into Pte Smith's death will be a matter for the coroner "but we would expect the coroner to consider the questions whether there were any systemic failures in the army which led to Pte Smith's death and, indeed, whether there was a real and immediate risk of his dying from heatstroke and, if so whether all reasonable steps were taken to prevent it".
Catherine Smith, Pte Smith's mother who brought the case, said: "I am absolutely delighted and relieved by the result.
"This victory is not for me, nothing can bring Jason back, but it is for all those brave men and women who are still risking their lives in our name. It is also for families who still have to go through the trauma of an inquest."
Jocelyn Cockburn, her solicitor, said: "The implications of this judgment are simple - our armed forces now have the same protections as all the rest of us.
"The MoD suggestion that they should lose these protections when on the battlefield is outrageous. Soldiers have the right to know, when risking their lives for us, that we have provided them with all reasonable protection."
Mrs Smith added: "Jason knew he could die and I accept this. But I found out at the inquest that simple steps that could have been taken - like providing air conditioning units which were available 12 kilometres away - weren't taken and this put his life at risk unnecessarily." Pte Smith was from Hawick in the Scottish Borders.
The MoD spokesman added later: "This has never been about seeking to deny rights to our service personnel.
"The protection and safety of our personnel remains our priority at all stages of training, equipping, planning and operating.
"The MoD accepts that there are limited circumstances when Armed Forces personnel come within the UK's jurisdiction for the purposes of the ECHR when they are deployed overseas.
"This includes the sad circumstances of Pte Jason Smith's death, where Pte Smith was at all times under the UK's authority and control when receiving medical attention on a UK-controlled Army base in Iraq.
"But in the heat of battle during dynamic and fast-moving military operations on foreign territory, the UK could not secure the rights and freedoms which the Human Rights Act seeks to guarantee.
"We are very concerned by the attempt to insert lawyers into the chain of command in the middle of a battle, which would only create uncertainty, hesitation and potentially greater risk to our people."
Shami Chakrabarti, director of civil liberties campaign group Liberty, said: "This is a wonderful landmark decision that will defend Britain's bravest men and women for years to come.
"Some would like to caricature human rights as shielding only criminals but the Court of Appeal has made clear that they belong to everyone.
"The only sadness is that it took the Court of Appeal to teach the Government this lesson. As with the Gurkhas, it is too easy to put people in harm's way without according them the respect and protection they deserve."
Shadow defence secretary Liam Fox said: "The Government has a moral obligation to minimise the risks to our Armed Forces at all times as part of their duty of care. But it is nonsensical and absurd to try to apply the same legal considerations on the battlefield that exist in non-combat situations.
"To apply the Human Rights Act in a war zone flies in the face of common sense. Our troops and commanders have enough to worry about on the battlefield without worrying about where the next legal attack will come from."