In 2003, train drivers’ union Aslef was told by a UK court that it could not legally expel a member for being an active member of the BNP, although the decision to do so had been reached democratically and within the union’s rules.
The union maintained it has a right to choose whether to admit an individual.
The European Court of Human Rights ruled that the union was correct and that the government position violated Article 11 of the Convention for the Protection of Human Rights, which is concerned with freedom of association.
The government has been ordered to pay the union e53,900 (£36,800) in legal costs and expenses.
Aslef national organiser Andy Reed said: “This is a significant decision not only for us, but for the whole trade union movement. Union members can now be confident that they have the autonomy to choose who joins them in their organisation.”
TUC general secretary Brendan Barber called the decision an “important and welcome judgment”.
Aslef was supported by a coalition of 18 trade unions who gave the union financial assistance when it was decided to pursue a challenge to the European courts.