It is not the most attractive piece of land in Lancashire. But for Janine Bebbington and her friends, Moorside Fields was where all the important things in life happened.

“It was our playground, it was where we went and climbed trees, used the running track from the nearby school, played rounders, explored, kissed people in the bushes, drank cider, did all the things that people get up to in green spaces.”

Sitting in the middle of three estates in south Lancaster, the five fields have been enjoyed by locals for more than half a century. But plans to ensure that future generations will find delights there have been scuppered by the supreme court. On Wednesday, the court stripped Moorside Fields of its village green status, a ruling that campaigners predict will have major implications for the protection of open spaces across England and Wales.

Under the Commons Act 2006, land that has been used for informal recreation for at least 20 years by local people without challenge or permission can be registered as a village green. Once registered, it is protected from development.

Fears that the land might be built upon saw the Moorside Fields Community Group attempt to register the fields as a village green in 2008. The group won its case in the high court and the court of appeal. But the supreme court judgment, by a majority of three to two, has reversed the earlier decisions.

“This is a deeply worrying decision as it puts at risk countless publicly owned green spaces which local people have long enjoyed, but which, unknown to them, are held for purposes which are incompatible with recreational use,” said Nicola Hodgson, case officer for the Open Spaces Society, which campaigns for the protection of town and village greens. “We urgently need a change in the law to ensure our precious green spaces are protected.”

The county council, which owns the land, had objected on the grounds that the fields might be needed for the expansion of the local school. Some parents feared such a move would open up the school playing fields to the wider public, something that constituted a threat to pupil safety. Handing down its judgment in favour of the council, the court also quashed a separate attempt to grant three hectares of a wood in Surrey, owned by the NHS, village green status.

Moorside Fields in winter. Photograph: Janine Bebbington

“I think that this judgment totally redefines the way we understand land held in the public domain,” Bebbington said. “It affects every piece of land held by a statutory body, for example by the MoD, the NHS and local authorities.”

She added: “I fear that Moorside Fields will now be developed or sold to fund new schools elsewhere. We are sad for the people of south Lancaster who in time will lose one of the last bits of open space available to them; and we are sad that England will be less green and pleasant as a result of this judgment.”

A spokesman for Lancashire County Council said: “Our primary concern has always been to ensure that Moorside Primary School provides a secure environment where pupils can get the best education. This is a really important case not just for Lancashire County Council but for other local authorities and we are pleased that the court has recognised there is a need to protect this land for future generations.”

The ruling is a major setback for open space campaigners who have enjoyed mixed fortunes down the years. A House of Lords decision in 1999, approving the right of the village of Sunningwell in Oxfordshire to register a strip of land as a village green, saw similar applications mushroom across the country.

But the introduction of the Growth and Infrastructure Act in 2013 stipulated that land which had been subject to planning applications could not be granted village green status, staunching the flow of further registrations.

“This ruling reflects what’s going on at a broader level in our society,” Bebbington said. “Every bit of green space has to be available for development because suddenly land is gold, especially to local authorities that don’t have any money. These spaces are community assets that help to keep us healthy and they are very important. They connect communities but they are taking them away from us.”