A group of allotment-holders at a 118-year-old site in Watford have won a landmark legal victory to save their plots from redevelopment, in a judgment their lawyers say could have important implications for similar sites around the country.

Gardeners from the historic Farm Terrace allotments, in the shadow of Watford FC’s Vicarage Road ground, successfully blocked a second decision by the communities secretary, Eric Pickles, to allow the site to be built on by a consortium of Watford borough council and a developer.

The minister’s initial ruling to grant permission to an earlier application had been overturned by the high court, and now a judicial review of that verdict has sided with the plot-holders, in what one of their number described as “a victory for the little people”.

The verdict, believed to be the first time the courts have overturned a decision to allow development on allotments, means the 128 plots will not be ripped up to build housing and a car park. Land adjacent to the site is likely to be built on, but the campaigners argued that by the council’s own admission its scheme, which includes space for the potential expansion of a local hospital, was viable without destroying their plots.

There were tears, hugs and shouts of “We bloody well won!” at the allotments on Friday morning when the judicial review result was revealed to several dozen plot-holders and supporters, a number of whom have lovingly tended their plots for decades.

Swallowing tears, spokeswoman Sara Jane Trebar said the group was thrilled by the decision, which vindicated its two-year campaign funded by hundreds of small donations from gardeners and allotment groups around the country.

“This is a huge victory, not just for allotment holders but for the average person who feels let down by their councils and government,” she said. “It shows that it is possible to fight injustice and win.”

Pete Baillie, who for 15 years has been growing “just about everything” on his small patch, said: “I have lived in Watford all my life and I just knew that to take this lovely place and turn it into houses and a car park was totally, totally wrong.

“But this is not my plot, I’m just the custodian, and when I give it up someone else in Watford will take it on and make it theirs. Why destroy that?”

In a statement, Watford borough council said it was disappointed by the ruling and would consider appealing. “We remain resolutely determined that the allotments are key to providing a scheme which will deliver on its promise to regenerate west Watford providing new homes, business and community facilities and much-needed space for Watford hospital.”

Under the Allotments Act 1925, councils can only develop statutorily protected allotment land with the permission of the secretary of state, and only if strict criteria are met. In reality such requests are rarely turned down.

Overturning Pickles’ decision in the judicial review, Mr Justice Ouseley found the council’s plans for the development had changed significantly after it had applied for consent, but that it had not informed the minister of the changes, and so his decision could not stand.

Adam Hundt of Deighton Pierce Glynn, representing the campaigners, said the ruling “strikes a very important blow” for others in a similar position. “I have been contacted by lots of allotment groups since this process stared saying: ‘If only we had known we could do something about our development, and now it’s too late.’”

In a statement, communities minister Stephen Williams said the government had taken its decision “based on the evidence provided by the council at the time”. “Since 2010, where this government has consented to the disposal of allotments, alternative plots have been provided, and the total amount of allotment provision has actually increased as a result.”