The Home Office is facing a high court challenge over the £1,012 fee it charges to register a child as a British citizen, after a judge granted campaigners permission to apply for a judicial review.

The case is to contest the legality of the amount of the fee – not the charging of it – when the administrative cost of processing a registration is £372, campaigners said.

Mrs Justice Yip, sitting in the high court, warned the Project for Registration of Children as British Citizens, a charitable company, it faced an “uphill struggle”.

PRCBC estimates there are 120,000 children in the UK who have grown up British and are being charged “unaffordable” fees to register as citizens. It has accused the Home Office of “barefaced profiteering”.

Amanda Weston QC, for the campaigners, told the court the futures of children who could not pay the “profit element” of the fee would remain precarious.

“The benefits of citizenship would be denied them,” she argued, which would have an “ongoing impact on their futures, access to education, travel, security, sense of identity and private lives”.

Speaking after the hearing, Weston said: “There are thousands of children that we never get to hear about because their parents are too ashamed to admit it, and kids find out they are not British when they are 13, 14 or 15, and it is a horrible shock. So that’s why it is so important that the courts look at this carefully.”

Welcoming the ruling, Solange Valdez-Symonds, the PRCBC director, said: “It is an emotional moment. It’s been nearly six years for PRCBC trying to bring this case forward. It is early days. It’s an achievement for us as well as for the children.

“The futures of these children are slowly and silently being chipped away. No child should be denied their right to British citizenship because of a profit-making fee they cannot afford.”

Steve Valdez-Symonds for Amnesty International UK said it was a “tremendous step forward in a longstanding dispute” to establish the rights of children denied by “these outrageous fees”.

The case had initially been refused permission, but PRCBC renewed its application after the court of appeal allowed permission to apply for a judicial review in another case involving a child who was unable to pay the fee, which was ultimately covered by a wellwisher. Yip agreed the two cases had some overlapping issues.

William Hansen, the lawyer representing the responsible minister, argued the case was a rerun of arguments that had failed in a previous legal challenge to the Home Office fee.