The Government is legally entitled to take court action to recover social security benefits paid "by mistake" to claimants innocent of any wrongdoing, a judge has ruled.
Lawyers say the test case ruling affecting the poorest members of society could have an impact on "hundreds of thousands" of cases.
The Child Poverty Action Group (CPAG) had argued at the High Court in London that the ministers have no power to seek to claw wrongly-made overpayments, but deputy judge Michael Supperstone QC ruled against the charity and said a common law power exists.
He declared the Government is "entitled to ask for money back on the basis that the recipient was not entitled to receive it".
He ruled lawful the controversial practice of writing to claimants who had received too much in benefits telling them the Government is allowed to ask for the money back - and seek recovery through the courts if necessary.
The judge said he had been told that, during the period March 2006-February 2007, "such letters have been sent in some 65,000 cases".
Recognising the widespread implications of his ruling for many people, the judge gave the CPAG permission to appeal to the Court of Appeal and no more letters will be sent out until the appeal judges have given their ruling.
Later Sarah Clarke, CPAG's solicitor in the case along with Graham Tegg, said: "No-one has yet been taken to the county court, so far as we know, but this decision opens the way for it to be done.
"If the judgment stands, this can be done even where a claimant has an appeal tribunal ruling that an overpayment should not be recovered as there was no failure to disclose relevant information and no attempt was made to misrepresent the facts."
Ms Clarke said: "We don't know how many people will be affected, but it could run into hundreds of thousands."
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