Cheers erupted at a homeless camp in Victoria on Tuesday when residents heard British Columbia's Supreme Court had rejected the government's bid to take down their tent city.

"We won, we won," said dozens of people who have been living in tents on the grounds of the city's law courts.

The B.C. Supreme Court's top judge refused the province's request to grant an injunction forcing the estimated 100 homeless campers from the courthouse lawn.

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Chief Justice Christopher Hinkson ruled the government did not prove it will suffer irreparable harm if an interim injunction to remove the camp was not granted.

"I find that the balance of convenience weighs overwhelmingly in favour of the defendants," Hinkson said in his written decision.

"I therefore decline at this time to grant an injunction removing the individuals who are currently residing at the encampment from the courthouse green space."

Hinkson said he's concerned that issuing an injunction would mean the homelessness problems would simply migrate to other areas of Victoria.

Camp resident David Smith said the ruling signals that municipal, provincial and federal governments must do more to provide housing for homeless people.

"Now is the turning point, potentially," said Smith, who has been at the camp for six months. "The city needs to put its act together and come up with a proper solution."

The camp has been growing since last spring when many of the city's homeless who were sleeping in parks moved to the courthouse property and started building a more permanent community that included tents and a common gathering area with a fire.

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Lawyer Catherine Boies Parker, hired by the Together Against Poverty Society to represent the more than two dozen people named as defendants in the government's application, told campers that their personal stories about homelessness helped sway the ruling in their favour.

"It is all about your stories and why it's important to be here and what a good job you're doing taking care of the camp," she said. "It is a lovely judgment."

Lawyers for the government told the judge they needed the injunction because campfires and a lack of facilities have created a health hazard and that there's criminal activity such as drug trafficking around the camp.

The injunction application claimed people living in the camp are trespassing and have defied requests and orders to leave the property, despite the government's offer of other housing.

Despite the ruling, the government has asked the court to hear arguments for a permanent injunction for camping on the courthouse grounds at a trial set for September.

Citizens' Services Minister Amrik Virk said the government has found shelter space for 150 people and provided rent supplement payments to another 40 campers.

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"The permanent injunction application is going to be heard on Sept. 7, but in the interim we're going to continue to look for housing options," he said.

Victoria city bylaws permit camping overnight in parks if shelters are full but require people to pack up every morning. The courthouse grounds are provincial property and are not subject to the bylaws.

Residents living near the courthouse camp are organizing a community meeting to voice their concerns about the camp they call a government-created ghetto.