The Court of Appeal has given an anti-poverty group permission to continue its legal battle against the exclusion of beneficiaries from the Working for Families tax credit.
In October last year, the Child Poverty Action Group lost a High Court bid to have restrictions on the tax credit labelled discriminatory.
The group says the Government was wrong to make the credits available only to families working more than 20 hours per week.
However, the High Court found the rules produced no real disadvantage for most families receiving benefits, with the exception of a small group.
The Court of Appeal has given the Child Poverty Action Group leave to appeal that decision.
Group spokesperson Susan St John says many parents cannot work because of disability or illness.
She says the policy discriminates against about 230,000 children, and up to 175,000 of those are in serious hardship.