Mr Justice McCullough ruled that residents of Primrose Hill had not been properly consulted before the council finalised the CPZ scheme.
The CPZ proposals, introduction of which had been postponed pending the outcome of the case, were overturned by the judge, putting the council back to square one.
The decision was a victory for ten members of the Primrose Hill Action Group (PHAG).
'Their views were never welcomed, let alone sought.
'Letters were not acknowledged; requests for discussions were ignored; when officers and representatives of PHAG did meet, most, if not all, of the time was spent by officers telling PHAG what they thought, rather than listening to what PHAG had to say.
'There is no letter in the files in which the London Borough of Camden invites PHAG to express their views.
'What PHAG had to say was sometimes ignored and sometimes incompletely reported to the committee and always accompanied by assertions intended to lead the committee to reject as unsuitable what PHAG were reported to have suggested.'
By contrast, the council's officers never failed to emphasise the benefits of the CPZ, said the judge.
'Nowhere was there recognition of the possibility, let alone the fact, that a number of the beneficial results of introducing full controls might be as well achieved by other means.
'In the same way, assertions by PHAG about the numbers of people or households who shared their views were ignored, or, when reported to the committee, were accompanied by positive statements or omissions calculated to undermine the reality of such support.'
The judge said that both the PHAG and the Chalcot Crescent and Rothwell Street Residents' Association (CCRSA) 'were entitled to expect much better treatment than they got' from the council's officers.
The judge said fresh consideration was required both as to the need for a CPZ, its hours of operation and the amounts be charged for permits.
'Whatever the eventual outcome, the process of consultation must begin again and the differing views and suggestions considered and evaluated in a spirit of respectful mutual co-operation.
'May I express the hope that this judgement will not be seen, for too long at least, as one producing winners and losers, but rather as something that provides a new beginning,' concluded the judge.
Outside court, Downing Street caterer Clare Latimer said the stability of her catering business, Clare's Kitchen, had been jeopardised by the CPZ.
'Now we've got to go back to the start. We have to get our head together and sort something out. Let's hope we can work together.'
Ms Latimer said the CPZ would have generated 'outrageous' income for the council if it had been allowed to go ahead, and in a way which would have been unfair to most of the locals.