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Mr Justice Collins has given the green light for a challenge which could have implications in respect of local authority obligations to pay the rent of those living in accommodation owned by relatives.
The case centres on 24-year-old Gloucester woman Victoria Dadds, whose counsel is James Bowen of 6 King's Bench Walk chambers.
Her application for housing benefit was turned down when she sought assistance on the rent for a flat she lives in at her parents' home.
Dadds moved into the two- bedroom flat after she was evicted from short-lease accommodation which had been paid for by housing benefit.
However, when she sought financial help to pay rent at her parents' home in April, Kingswood Borough Council refused on the basis she was living with a relative and in those circumstances provision of her accommodation could not be classified as being a commercial transaction. That decision was later upheld by South Gloucestershire Review Board.
The court was told that Dadds, after being evicted from her home, then refused a council offer of accommodation in Bristol and instead moved to the flat.
In granting leave for her challenge to the later refusal of rent support, Mr Justice Collins said that one of the reasons her father had chosen her as a tenant for the flat was that she could help look after her mother who suffers from multiple sclerosis.
He was in arrears with his mortgage payments and hoped that having his daughter living in the flat would enable him to get a part-time job to help clear his debts.
However, the local authority took the view that because of housing benefit provisions that exclude payments to claimants living with close relatives or in tenancies which cannot be regarded as commercial agreements, it was not under a duty to assist in this case.