The Federal Court has upheld an appeal against the funding arrangements for transport under the National Disability Insurance Scheme.

Liam McGarrigle, 21, challenged an earlier ruling that the NDIS pay only 75 per cent of his necessary transport costs.

Justice Debbie Mortimer ruled that the decision by the Administrative Appeals Tribunal erred in law and be set aside.

She has ordered the tribunal to reconsider the matter.

Mr McGariggle, who has autism, lives at Moriac, 25 kilometres from Geelong.

He spends nearly $16,000 per year on taxis transporting him to and from his work and NDIS-supported activities.

Victorian Legal Aid's Joel Townsend said the McGarrigle family were pleased with the decision.

"The support Liam's receiving is not for transport in general, it's for transport for him to attend his supported employment and to attend at his social skills classes, and those are really enormously important parts of Liam's life," he said.

"For other people under the scheme it will mean that whatever their particular supports are that they need they will get those if they are reasonable and necessary."

The court decision could benefit hundreds and possibly thousands of NDIS participants who live in remote localities.

A decision to fund 100 per cent of transport costs could have significant implications for the ongoing viability of the $22 billion NDIS.

Transport allows Liam to be 'independent young man'

Michelle McGariggle, Liam's mother, said support from the NDIS had helped her son, but the decision would "iron out some wrinkles."

"We don't have high expectations — the scheme is not meant to give us a limousine service — we just wanted the basics for Liam to be able to be an independent young man in his own right," she said.

"Not have to rely on his mum and dad to have to drive him to work for the rest of his life, because what 21-year-old wants that?"

She said Liam got a sense of purpose from his work.

"He waits outside every morning for that taxi to go to work, like his dad does, and we've seen him grow into a beautiful young man because of the independence."

Justice Mortimer also ordered the Administrative Appeals Tribunal to pay the costs of the McGarrigle family.