Local authorities could face a big increase in claims by foster children over historic or recent child abuse after a landmark ruling by the Supreme Court.

Lawyers warned councils may now have to award foster parents holiday and sick pay as the ruling meant they could now be classed as 'workers'.

Former foster child Natasha Armes from Nottingham won her case against Nottinghamshire County Council after judges ruled it was liable for abuse she suffered as a child 30 years ago.

They found that even though the council was not negligent in choosing or supervising the foster parents, it was 'vicariously liable' for the physical and sexual abuse they committed.

The ruling overturned previous decisions against Ms Armes at the High Court and Court of Appeal.

In the judgment Lord Reed said the local authority carried out the recruitment, selection and training of foster parents, paid their expenses and supervised the fostering.

The 'foster parents with which the present case is concerned cannot be regarded as carrying on an independent business of their own', he said.

'Although the picture presented is not without complexity, nevertheless when considered as a whole it points toward the conclusion that the foster parents provided care to the child as an integral part of the local authority's organisation of its child care services.'

Ms Armes' lawyers said the judgment had 'finally put right a terrible injustice which has denied so many victims a legal redress that is widely available to other survivors of abuse.'

They added: 'This removes the arbitrary distinction which meant local authorities could be held vicariously liable for abuse if it took place in a children's home, but not if it took place in a foster carer's home.'

The judges said the next stage of the litigation was for damages to be assessed.

Colin Pettigrew, corporate director for children and families at Nottinghamshire County Council, said: 'Ms Armes should have been safe in the care of her foster carers 30 years ago and she wasn’t, this is a matter of huge regret to us.

'We, of course, accept the findings of the Supreme Court and will be working with Ms Armes' representatives to resolve any outstanding issues related to our liability.

'This Supreme Court determination will have far-reaching implications for us and every other local authority across the land which has children’s social care responsibilities.'