Many Jewish schools in the UK will be forced to tear up their entry rules after the admissions policy of the largest school, JFS, was today ruled racially discriminatory.

In a landmark judgment, the Court of Appeal said that it was illegal for Jewish schools to admit pupils on the basis of whether their mother was Jewish or not.

In a unanimous decision, Lords Justice Sedley, Rimer and Lady Justice Smith concluded: “The requirement that if a pupil is to qualify for admission his mother must be Jewish, whether by descent or conversion, is a test of ethnicity which contravenes the Race Relations Act 1976.”

The appeal was brought on behalf of M, who was refused a place at JFS in 2007 because his mother was a Progressive convert, making him non-Jewish according to the Office of the Chief Rabbi, the school’s religious authority.

Last summer a High Court judge took the view that the school’s policy was based on religious, not racial, grounds and therefore lawful.

But the Court of Appeal ruled that using matrilineal descent as a criterion for entry was based on race.

JFS governors said they now intended to appeal against the decision to the House of Lords.

A spokesman for the United Synagogue, which has already spent £150,000 on legal fees, said: "Unless the Court of Appeal decision is overturned on appeal it will have a very serious effect on all Jewish schools and on many of our communal organisations."

The Board of Deputies said it was "deeply concerned" at the potential effects of the court's ruling, though adding that this was "not expected to impact on September 2009 admissions".

John Halford, of Bindmans solicitors which represented M's case, said; “We welcome the strong statement of the Court of Appeal that the fundamental right to equality before the law regardless of race applies to the admissions criteria of a faith school.

“We have never sought to interfere with the right of Orthodox Jews to define for their own religious purposes whom they do or do not recognise as Jewish.

“However, it is unlawful for a child’s ethnic origins to be used as a criterion for entry to a school. Such a practice is even more unacceptable in the case of a comprehensive school funded by the taxpayer.”

He added that the JFS should do “what the law demands” and admit M immediately to the school. The school should also draw up “inclusive admissions criteria that are fair to all who want their children to have a Jewish education.

“We would be more than happy to insist them in that endeavour, free of charge.”

But the Chief Rabbi Sir Jonathan Sacks pledged his support for a legal challenge to the court's ruling. In a statement, he said: "The principles underlying membership of the Jewish faith have been maintained consistently throughout Judaism's long history, as has our duty to educate our children in the principles and practice of the faith itself.

"These principles have nothing to do with race and everything to do with religion. Ethnicity is irrelevant to Jewish identity, according to Jewish Law. Education has been the crucible of Judaism throughout the millennia, and the development of Jewish faith schools is one of Anglo Jewry's greatest achievements.

"I have advised the leadership of JFS, the United Synagogue and the Board of Deputies on behalf of our community that they have my full personal support and encouragement to use the necessary avenues available to them to maintain our historic rights to be true to our faith and a blessing to others regardless of their faith."

If the Court of Appeal’s decision stands, it could have widespread implications for other Jewish schools.

It would mean that they would have to introduce faith-based tests – such as synagogue attendance, for example – similar to Catholic schools to determine entry.

It would also mean that the children of Progressive converts who were denied a place this year could re-apply or else sue the school for damages.

The court's decision was welcomed by the chief executive of Liberal Judaism, Rabbi Danny Rich. "The JFS, a state comprehensive funded by taxpayers, has been exclusively following one Jewish religious authority and ignoring the rest," he said.

"The Court of Appeal’s ruling means that the JFS will now be open to children from all types of Jewish background, and this is something we truly applaud.”

But Dayan Yisroel Lichtenstein, head of the Federation of Synagogues' Beth Din, said it was "deplorable" that the court had "crossed a red line and strayed into religious issues that they shouldn't have. They have arrogated themselves the right to decide who is a Jew."