The law which requires people to disclose all previous convictions to certain employers is a breach of human rights, the Court of Appeal has ruled.
The declaration of incompatibility granted by three judges headed by the Master of the Rolls, Lord Dyson, was hailed as a victory for common sense by civil liberties campaigners.
But the Home Office said: "The protection of children and vulnerable groups must not be compromised. We are disappointed by this judgment and are seeking leave to appeal to the Supreme Court."
The judges said that neither the disclosure provisions of the Police Act 1997 nor those of an order made pursuant to the Rehabilitation of Offenders Act 1974 were compatible with Article 8, which relates to private and family life. They said it would be for Parliament to devise a "proportionate" scheme.
Campaigners had called for urgent reform of blanket provisions in the Criminal Records Bureau (CRB) system which mean employees must automatically disclose all convictions and cautions whether or not they are relevant to the job.
Liberty and the Equality and Human Rights Commission (EHRC) intervened in the case of "T", a 21-year-old man who received warnings from Manchester Police when he was 11 years old in connection with two stolen bikes. This information was disclosed on two occasions: when he applied for a part-time job at a local football club at the age of 17 and later when he applied for a university course in sports studies.
T's solicitor, Mike Pemberton, a partner and head of the civil liberties unit at Stephensons Solicitors LLP, said: "The warning which was issued when my client was 11 years old was for an alleged minor offence and was accepted in the presence of a parent, without taking into account how this may affect future employment.
"In this case, the continued reference to the warning has affected their ability to gain employment in specific roles. This is despite them having no further contact with the police and the judge in the High Court case commenting that their behaviour since childhood has been exemplary.
"It defies common sense that a minor caution at the age of 11 should have to be disclosed on every application for a job of certain types in the future. Furthermore, my client undergoes the rigmarole of having to explain the matter again and again. I welcome the judgment of the court which reflects that human rights do equal common sense."
Liberty's legal officer, Corinna Ferguson, said: "This sensible judgment requires the Government to introduce a more nuanced system for disclosing this type of sensitive personal data to employers. For too long irrelevant and unreliable information provided under the blanket CRB system has blighted people's lives. We hope that long overdue reforms - properly balancing the aim of public protection with privacy rights - will now be forthcoming."