Police authorities may have to find tens of millions of pounds extra to fund their pension liabilities after a retired inspector won a landmark legal challenge preserving his income.

The ruling by a court in Leeds overturns Home Office guidance that permitted a review of the pensions of injured officers once they reach retirement age and resulted in lower payments.

One estimate suggested it could add £80m to police authorities' bills. A high proportion of police authorities had accepted the guidance.

The test case was brought by Edward Crudace, 67, who served with Northumbria police. He was seriously injured when arresting a prisoner and was forced to retire from the force.

His injuries meant he could not work and he was awarded a substantial injury pension. When he reached the age of 65, however, it was cut by Northumbria police, relying on the Home Office guidance, leaving Mr Crudace with a severely reduced income.

David Lock QC of No5 Chambers, who represented Mr Crudace, argued that the Home Office guidance was unlawful because it led to police injury pensions routinely being reduced to the lowest level when former officers reached the age of 65.

In a high court ruling in Leeds, Judge Behrens reversed the cuts to Mr Crudace's pension and ruled that the Home Office guidance was unlawful because it was inconsistent with the statutory scheme under which the pensions were paid.

The judgement, he acknowledged, would enable other former police officers who had had their pensions reduced in a similar way to apply to police authorities for the decisions to be reversed and for their pensions to be restored.

Mr Crudace's solicitor, Ron Thompson, of the law firm Lake Jackson, said: "This judgement opens the door for thousands of injured police officers who have had their pensions reduced unlawfully to apply to have the decision reversed. When the decision is reviewed they will be entitled to a pension at its proper level and, in many cases, to a substantial back-payment.

"The right thing for police authorities to do now is to identify every former injured police officer whose pension has been wrongly reduced, and to agree to review each one. I hope that the Home Office recognises that the fault for this misconceived guidance lies with officials at the Home Office rather than individual police forces. The cost of putting this debacle right ought to be met by the Home Office and not individual police forces."

Mr Crudace said: "I always knew that my pension had been wrongly reduced but Northumbria Police Authority refused to accept this, and have wasted thousands of pounds of taxpayers' money attempting to defend an unlawful decision.

"I know there are many former police officers who have been injured serving their communities in the same position as me. I hope they will be able to use this landmark decision to get their pensions restored to the level they are entitled to."

The Home Office declined to comment. A spokesperson for Northumbria Police Authority said: "[We] and Northumbria police, along with a number of other authorities and forces, implemented Home Office guidance concerning the granting of injury awards in addition to pensions. The guidance stated that once a retired officer reached state pension age then the force could review their injury award. Following judicial review proceedings the high court has ruled that the guidance is wrong in law.

"Northumbria Police Authority and the force have a duty to ensure the most effective use of public money and acted in good faith when following this guidance. We now welcome the clarity provided on this issue by the high court. As a matter of urgency we will be reviewing all the decisions made in light of this judgement and will be contacting anyone affected personally.

"We also recognise the valuable contribution all our retired officers have given to the community and this in no way should be underestimated."

Mike Barker, the deputy chief executive and solicitor of Northumbria Police Authority, said: "We are still assessing all of the implications of the ruling at this stage and are looking at the impact this may have on the budget."