Court of Appeal judges yesterday ruled in favour of the Work and Pensions Secretary by a two-to-one majority.

A judgement in the case was handed down by judge Sir Patrick Elias, following a legal challenge bought by Shelter and the Equality and Human Rights Commission on behalf of four single mothers and their children under the age of two.

Sir Patrick ruled that the parents were not substantially more disadvantaged by the cap than lone parents in general.

The ruling overturns a High Court decision last year which found that the benefit cap, which limits the income households receive in certain benefits, unlawfully discriminates against single parents with very young children.

Campaigners have said the ruling is “extremely disappointing”, claiming it is “absurd” that a government policy recognises that these lone parents should not be expected to work, but also places a cap on them and their children if they do not have a paid job.

Carla Clarke, a solicitor from charity Child Poverty Action Group, said: “There is an absurdity about a government policy which on the one hand recognises that lone parents of young children should not be expected to work but on the other punishes them and their children with the cap if they don’t have a paid job.

“Over 70 per cent of capped families are headed by a lone parent, the large majority of whom are women. Our own upcoming High Court case on behalf of two lone mothers and their families takes a wider approach than today’s case, challenging the lawfulness of the cap as it applies to lone parents irrespective of the age of their youngest child.

“The cap is leaving so many lone parents stranded - unable to cut their outgoings any further yet unable to escape the cap by finding a paid job which they can combine with their multiple caring responsibilities, precisely because they are caring for children alone, something the Court of Appeal recognised.”

A spokesperson for the Department for Work and Pensions said: “Since the benefit cap was introduced, 27,000 lone parents are no longer capped because they have moved into work. We are committed to helping parents into employment that fits around their caring responsibilities, and we welcome the court’s decision.

“The benefit cap provides a clear incentive to work, as those eligible for working tax credits or earning the equivalent in Universal Credit are exempt. Additional support is available to people who need it through Discretionary Housing Payments.”