Labour might have to refund more than a million pounds to supporters who were wrongly excluded from the party's leadership election after a judge ruled the party could not block new members from voting, in a boost for Jeremy Corbyn's re-election hopes.

In the latest part of an increasingly chaotically administered leadership election process, the party's ruling body had attempted to block any Labour party members who joined after 12 January from voting in this summer's leadership election, in a bid to reduce entryism.

Five Labour members raised money through crowdfunding to challenge this decision and the case was successful, in part because the judge agreed the Labour website contained a sentence promising that all new members would be allowed a vote in any leadership election at the time the individuals joined the party.

More than 130,000 new members were excluded by the original Labour decision but if the judgment stands then all of them will be able to vote in the leadership election. The decision is likely to boost Corbyn at the expense of leadership challenger Owen Smith, since many of Corbyn's supporters signed up as members in the early part of the year.

Many of the new members who were excluded later paid £25 and signed up again as registered Labour supporters in order to vote in the leadership election.

The ruling means that all excluded Labour members fit this category are now eligible for £25 in damages from the Labour party, according to lawyers involved in the case.

One Labour party source suggested to BuzzFeed News that in the region of 50,000 individuals could be eligible for the refund, costing the party around £1.25 million if they all asked for their money back.

In addition, the party has to pay substantial legal fees associated with this case in what could be a major financial hit for the organisation.