Two judges said Mr Howard's decision-making process was fatally flawed when he decided two Kashmiri students jailed for murdering an Indian diplomat should serve 25 and 20 years before being considered for parole.
Lady Justice Butler Sloss, sitting with Mr Justice Latham, said Quayyum Raja and Mohammed Riaz were entitled to have the decision set aside, as the Home Secretary now admitted his decisions were "unsustainable" and had agreed to a fresh review of the cases.
A House of Lords ruling last year said when Home Secretaries set the tariff - the term murderers must serve before they are considered for parole - they should be given the reasons and a chance to make representations.
Lawyers for the Home Secretary admitted the two men had not seen the factual summary or the judicial advice on which Mr Howard had based his decision, or been given a chance to make their own representations. Lady Justice Butler Sloss said: " ... it is clear that the principles laid down by the House of Lords were not complied with ... "