The High Court has found parts of the Whanganui bylaw which bans gang patches to be illegal.
The display of gang insignia is banned in all urban areas of Whanganui and some rural halls to prevent gang confrontation and intimidation of the public.
Last year, the Hells Angels Motorcycle Club sought a judicial review of the council bylaw in the High Court.
The gang argued that the law requires such a bylaw to pinpoint a specific place, but Whanganui's ban encompasses the whole city and beyond and should therefore be revoked.
Justice Clifford's decision, released on Thursday, agrees that the district-wide nature of the ban is wrong because, by law, it can only apply to specified areas and not all public places.
The decision also says the council didn't consider the right to freedom of expression in setting the ban, and should now look at an appropriate bylaw.