In the first case of its kind, the judges grappled with the impact of the new Human Rights Act on the traditional partnership between the courts and social services in the child protection field.
And, as a result of their ruling, social workers will in future operate under tighter supervision by judges who will be entitled to demand more information in individual cases and to refuse care and adoption orders where interference in family life is unjustified.
The appeal court's decision also raises the spectre of civil damages claims being launched against local authorities by children whose human rights have been breached by failings in the care regime.
Social services will now be under a duty to report to the courts if a care plan for a child breaks down or if a planned family reunion or adoption does not occur within an acceptable timescale.
The appeal court made its ruling in the context of two cases from Luton and Torbay in which care orders were challenged under the Human Rights Act which came into force in October last year.
Lady Justice Hale told the court: 'A care order is a serious interference with the right to respect for family life, not only of the parents, but also and more importantly of the child.
'The most serious interference is an adoption order, which finally and irrevocably brings to an end, not only the parents' parental responsibility for the child but also the legal relationship between the child and the whole of his family of birth.'
The task of the court was to interpret the role of the judiciary and social services under the 1989 Children Act in a way which was 'compatible' with Article 8 of the European Convention on Human Rights in which the right to respect for family life is enshrined.
The judge said a local authority would be acting incompatibly with the Act if it failed to take adequate steps to provide a child removed from his birth parents with 'a new family who can become his 'family for life' to make up for what he has lost.'
'Where the state has had to deprive someone of their family life, it seems to me that there is a corresponding positive obligation to take reasonable and appropriate steps to fill the gap.'
The judge urged the courts to 'beware a rosy tinted view of what can be achieved' by social services departments and 'must hesitate to make care orders unless satisfied that this is indeed the best option for the child.'
She accepted that not every breach of a care plan would amount to a violation of a child's human rights, but local authorities were duty-bound to provide full information to the courts and to keep judges up to date on a child's progress in care.
Any major changes in care plans should be reported to the court and judges are entitled to demand updated information if there is a real risk of a child's Convention rights being violated, she ruled.
Lady Justice Hale said the court's ruling 'should not place an undue strain upon resources or drive a coach and horses through the careful division of responsibility' between the courts and social services departments in child protection cases.
'The object is simply to seek to secure that the care system is operated in such a way as to comply with the Convention rights.'
Lord Justice Thorpe and Lord Justice Sedley agreed that local authorities are under a Human Rights Act duty 'to return to the court if a significant element in the care plan has failed or is threatening to fail.'
The first appeal before the court concerned three children from the Torbay area where the mother's partner had physically, sexually and emotionally abused the eldest, 'P', now aged 14.
In November last year a Plymouth county court judge made care orders in respect of all three children after finding that the mother's partner had repeatedly beaten them with a slipper and had sexually abused 'P'.
The mother had failed to protect the children and had joined in their 'emotional abuse' but the ultimate aim of social workers is to reunite her at least with the two younger children.
The appeal court judges dismissed the mother's appeal, ruling that full care orders had been justified in the circumstances.
The second case concerned a couple from the Luton area where family life had been seriously disrupted by the mother's mental health problems. She suffers from bi-polar affective disorder.
Care orders were made in respect of the couple's two sons, now aged 10 and 12, by a Luton county court judge in June last year.
Overturning the full care orders, and replacing them with interim care orders, Lady Justice Hale said the judge should have 'insisted on more information' from social workers or demanded that they report back to him if the care plan did not develop as expected.
STRAND NEWS SERVICE