A wealthy financier involved in a family dispute has made British legal history by winning anonymity in a libel case. This latest court attempt to censor internet material has led to claims that free speech is being further eroded in Britain.

In a novel extension of controversial superinjunctions, Mr Justice Tugendhat forbade anyone in Britain from identifying "Mr Z", who claims to have been defamed by his relatives in a row over a multimillion pound family trust.

The judge ordered that the relatives' identities also be kept secret, and that no one be allowed to detail allegations aired in the secret hearings in the high court in London. His ruling was published under the coded title ZAM v CFW and TFW.

This extreme court-ordered secrecy followed threats on behalf of Z's relations to publicise their accusations globally on the internet, where they could not be suppressed. Z told the judge the allegations were "entirely false" and he was being blackmailed. No defence was produced that the accusations were true. Shortly after Tugendhat issued the gagging order a lengthy set of allegations appeared online. Supposedly posted by a blogger in Niger, they accused Z of misappropriating money from the trust fund and of a sex offence.

The judge's ruling means the Guardian cannot provide any information that would help locate the posting on the internet. But the online document itself would appear to be immune to British court rulings.

Google says of its service blogspot.com that it usually only censors illegal or hate-speech postings and provides "a free service for communication, self-expression and freedom of speech".

People in other countries can continue to discuss the allegations. Sources claiming to be close to the man's relatives told the Guardian that they were living in Italy, out of British jurisdiction. The "Niger blogger" had purportedly been sent court documents by accident and could not now be prevented from circulating them.

Superinjunctions, in which all details of court proceedings are concealed, have never been granted in cases of libel, as far as is known. They have been granted in kiss-and-tell or breach of confidence cases. A special legal committee investigating the controversial orders is due to report next month.

In the most notorious case the oil traders Trafigura last year briefly obtained a superinjunction against the Guardian to suppress a leaked report on its toxic waste dumping, which even prevented reporting proceedings in parliament.

It is rare, though not unknown, for conventional injunctions to be granted in libel cases. These prevent the disputed allegations being repeated until a case is resolved. But it seems unprecedented, legal observers have said, to in addition allow anonymity to all the parties. It is feared it may allow a flood of wealthy libel litigants to seek secrecy injunctions against the media.

"This takes the epidemic of superinjunctions down a dangerous new path," said John Kampfner, who heads the free speech body Index on Censorship, among the groups campaigning for reform of the libel laws. "Now they are being used not only to protect supposed privacy, but libel too." Gavin Millar QC, a media specialist, said: "Courts are increasingly granting anonymity to claimants where withholding details of evidence used to be regarded as sufficient. This case seems to be more of the same. Open justice is suffering."

During the hearing on 3 March, Richard Spearman QC claimed it would be unfair to identify the financier, even though there was no truth in the allegations, because "the fact that [he] has had to seek relief would be capable of being made into a story in its own right and would be likely to lead to widespread speculation as to what story he has been concerned to prevent the defendants from telling". The court was told that employers and other family members had been contacted with the allegations.

Letters had been sent saying "Cleared for worldwide publication" and "on the verge of going viral" and mentioning the "worldwide web". One letter said: "Will some evil person leak the entire proceedings and all the sordid details so that the irresponsible global media … can really get their teeth into them?"

Mr Justice Tugendhat said in his ruling: "In this particular case the public interest in open justice is better served by granting anonymity."

Superinjunctions: A threat to free speech?

No one knows precisely how many superinjunctions have been issued. They are, by nature, secretive. An informed legal estimate is that as many as 20 have been granted in the UK over the past 18 months.

Their notoriety stems from a case in October 2009 involving the oil trading firm Trafigura. The solicitors Carter Ruck warned the Guardian that it would be in contempt of court if it published a parliamentary question about the company. The extraordinary powers attributed to the gagging order triggered alarm about threats to freedom of expression and transparency of justice.

Some lawyers caution that the term "superinjunction'' is used too loosely. It might be narrowly defined as a court order prohibiting its existence from being revealed and in which the parties are in some way or another rendered anonymous.

In recent months, because of criticism of their clandestine nature, judges have become reluctant to grant superinjunctions so readily and shown a preference for anonymised orders where few details are provided.

The Master of the Rolls, Lord Neuberger, is chairing a committee examining the use of super injunctions. It is due to report before Easter. In a speech earlier this month Lord Neuberger recognised that there is a problem. "The concern over superinjunctions is that they have, as Professor Zuckerman has put it, developed into an entirely secret form of procedure," he said.

"As he put it, 'English administration of justice has not [previously] allowed', that is 'for the entire legal process to be conducted out of the public view and for its very existence to be kept permanently secret under pain of contempt'.

"English law has not known of such a procedure – of secret justice – since 5 July 1641, when the Long Parliament abolished the court of star chamber." Elsewhere Zuckerman has attacked super injunctions as "curiosity suppressant orders" that undermine the rule of law.

Another variant is the hyperinjunction, a term used for an order that attempted to ban an individual from contacting his MP. The Liberal Democrat MP John Hemming, who used the protection of parliamentary privilege to talk about it, said the order dated from 2005.

Many superinjunctions relate to prominent footballers to prevent allegations about their private lives being published. An injunction awarded to Chelsea captain John Terry preventing the reporting of an alleged affair was repealed earlier this year.

Owen Bowcott