The children's commissioner for England, Sir Al Aynsley-Green, said the ruling would help vulnerable children who have until now had to accept local authorities as "judge and jury".
In a case brought by the Children's Legal Centre, the court concluded decisions about a young person's age and identity rest with the court, not the council. The case arose when a 14-year-old, known as K, came from Uganda to live with her father in London. Relations between K and her father broke down and her age and identity came into dispute.
K was housed by the local authority and made a ward of court. The council was ordered to carry out a Section 37 report into K's welfare, but instead age-assessed her and concluded she was over 18.
A three-day hearing to establish K's age and identity was appealed against by the council, which said it had final decision-making power. However, the Court of Appeal ruled that because the case involved family proceedings, her age and identity was for the court to determine and the hearing will go ahead.
Aynsley-Green said: "The decision introduces independence into the process. For too long, local authorities have acted as judge and jury. There is potential for a conflict of interest as the authority deciding on a person's age would also have the financial responsibility of caring for them."
Carolyn Hamilton, director of the Children's Legal Centre, said: "It is important these issues are dealt with by courts in a full fact-finding hearing."
