Editors are to be allowed more freedom in the way they report public interest stories, after Britain’s highest court backed the so-called "Reynolds privilege", in support of responsible journalism.

Lord Hoffmann, who gave the judgment, said that the Wall Street Journal Europe’s defence was based on what he would label the "Reynolds public interest defence", which was intended to protect "responsible" journalists from libel actions even if they could not prove the truth of what they had printed.

The Law Lords allowed an appeal by the Journal after it was previously told to pay out £30,000 damages to a Saudi businessman for libelling him in the course of an investigative article into funding terrorism.

Geoffrey Robertson QC, who was acting for the Journal, said the decision would give the media greater freedom to publish newsworthy stories, freeing "serious investigative journalism" from the fear and effects of libel action, as long as the resulting journalism was responsible.

Phil Sherrell, Media expert at International law firm Eversheds told HoldtheFrontPage: "When the Reynolds defence was created by House of Lords in 2001 it was widely assumed that it would lead to a liberalisation of libel laws for the media, giving them much greater latitude when reporting on matters of public interest.

"The approach of the Courts since that time had dashed those hopes - in fact, reliance on the defence by newspapers invariably opened another front against them, putting their conduct in researching and writing the article under minute scrutiny.

"The defence has only rarely been upheld.

"With [Wednesday's] decision the House of Lords is trying to radically alter the way in which the Defence is applied, allowing editors much greater freedom to decide the particular way in which they report stories of general public interest."