Lord Justice Beldam said to allow single mother-of-five Amelia Evans to stay in the one house she still occupies would be 'an affront' to every 'honest' person on the waiting list for council housing.
And he then took the highly unusual step of ordering the Legal Aid Board, which had funded the jobless divorcee's failed appeal, to pick up the tab for the costs of the case.
Otherwise the legal bills would have had to be paid for out of Shrewsbury and Atcham BC's 'limited' housing budget, because Mrs Evans cannot afford to pay them herself.
But after the hearing, held in Telford county court in July 1995, Mrs Evans launched an appeal against the judge's ruling and the repossession order was immediately suspended until the outcome of her case.
Today her counsel, David Watkinson, said the judge, Judge Northcote, should not have granted the order for possession, because there was a risk the council would then claim she had made herself 'intentionally homeless' by her own actions and refuse to find the family other accommodation.
But Jonathan Manning, for the council, said it had been 'entirely reasonable' to grant the order in the circumstances of the case and the question of the family's future housing was a matter for the council not the judge.
Mrs Evans, he argued, had only herself to blame if the council then ruled she was 'intentionally homeless'.
During yesterday's appeal the court heard Mrs Evans had been living in her own home - Middle Farm House, 10 Edgebolton, Shawbury - at the time she held her first tenancy, and had then managed to obtain a second tenancy after losing the house because the family failed to keep up their mortgage repayments.
She and her now ex-husband had bought Middle Farm House in 1987 but the following year she applied to the borough council for a tenancy, claiming she and her then four children were living with her mother, her stepfather, three brothers and a sister at 2 5 Pool Rise, Springfield, Shrewsbury, and the house was 'very overcrowded'.
She had no luck that year but in 1989 she made another application, again giving Pool Rise as her address and claiming she and the children were living with her mother and stepfather and their family.
In 1991 she was given the Springfield Way tenancy because of her apparent plight but in reality she was still living at Middle Farm House and she and her husband had taken out a a further loan on the house just the year before.
The second bogus application came in 1992 after legal action had started to repossess Middle Farm House because the family had fallen behind on the mortgage payments.
Mrs Evans, whose husband had by then left her, applied to the North Shropshire DC for housing, giving the Middle Farm House address and saying she and the children were facing repossession, but making no mention of the fact she had already been granted a tenancy by the borough council.
The district council then granted her a tenancy at (4) Windmill Gardens, Whixall, Shropshire, but the balloon was about to go up.
For the following year, 1993, the district council received a tip-off that Mrs Evans already had a council tenancy in Shrewsbury which she was sub-letting.
After an investigation the district council told Mrs Evans they would be taking legal action against her to repossess Windmill Gardens but she did not wait to be evicted, leaving in July 1993 and giving her new address as Springfield Way. By then the borough council was suspicious and after its own investigation it too launched legal action.
This time Mrs Evans fought the claim, only to be defeated when Judge Northcote ruled against her.
And yesterday her last-ditch bid to hang on to Springfield Way ended in defeat when Lord Justice Beldam, with the agreement of his colleague, Mr Justice Bennett, upheld the earlier ruling for the borough council to take possession of Springfield Way.
Lord Justice Beldam told the court: 'Those on the housing list who have as great or even greater a claim would justly be enraged if a court refused to make an order for possession where someone has obtained a property by flagrant and deliberate lying.
'This woman flagrantly and deliberately lied about her circumstances with the express purpose of providing herself with a higher score (on the housing waiting list) according to the local authority's requirements.
'When the deception was discovered her attitude was to lie and lie again. By her own conduct she has placed herself in this position.
'It would an affront to those who put forward their claims honestly, wait patiently and rely on housing authorities to deal fairly with their claims if the judge had concluded that in the circumstances of the case it would not be reasonable to make the order.'
After the failure of Mrs Evans' appeal the court heard her case had been entirely funded by legal aid.
Usually costs orders are not enforced against litigants on legal aid because they have no money but the appeal judges agreed the Legal Aid board itself should pay after Mr Manning told them otherwise the bill would have to be paid for from the local housing budget 'in effect, placing the costs of the case on other tenants.'