Ex-Foreign Secretary Jack Straw faces being sued over allegations of abduction and torture brought by a former Libyan dissident.
Abdul-Hakim Belhaj claims MI6, which Mr Straw was then responsible for, helped the US kidnap him in Bangkok in 2004 to return him and his wife to Tripoli.
The Supreme Court backed a Court of Appeal ruling allowing his action.
Mr Straw – among several parties in the case – rejects claims that he had been aware of the rendition.
Lawyers for Mr Belhaj, 50, say he is determined to sue unless he receives an apology and a token £1 in damages.
‘Waiting for justice’
Mr Belhaj, a leading opponent of then Libyan leader Colonel Muammar Gaddafi, says he was abducted – along with his pregnant wife, Fatima Boudchar – as he attempted to fly to London to claim UK asylum.
After being returned to Libya, he spent six years in jail, while his wife was released shortly before giving birth.
Mr Belhaj, who was once regarded by Western intelligence services as a terrorism suspect, alleges he was tortured by his Libyan jailers and questioned by British intelligence officers during his detention.
Mr Belhaj said of the court ruling: “I am gratified that we will have a trial. We have been waiting for justice for years. I continue to hope justice will one day be done – not just for my family, but in the name of everyone wrongly kidnapped in the war on terror.”
Ms Boudchar has had four more children in the time she and her husband have waited for this result.
She said: “I was five months pregnant with my first son, Abdurahim, when the CIA took us. After the terror of the abduction and the CIA prison he was born weighing only four pounds. Every time a new life joins our family I remember how afraid I was to lose him.
“I want a better world for my kids … I will fight until I see it or until officials admit that what was done to me was wrong.”
As well as former Labour MP Mr Straw, the case brought by Mr Belhaj and his wife is against former senior MI6 official Sir Mark Allen, the UK security services, the Foreign Office and the Home Office. All have denied liability.
The government had argued Mr Belhaj and Ms Boudchar could not sue because of a long-standing legal principle that prevents British courts examining the actions of other nations carried out in their own jurisdictions.
The Supreme Court ruling said the allegations were so serious they had to be heard before a British court because, if not, they may never be heard anywhere else in the world.
In a statement, Mr Straw said: “At no stage so far have the merits of the applicant’s case been tested before any court…
“As foreign secretary I acted at all times in a manner which was fully consistent with my legal duties, and with national and international law.
“I was never in any way complicit in the unlawful rendition or detention of anyone by other states.”
By Dominic Casciani, home affairs correspondent
This is a major blow for the government, which has fought for years to prevent the allegations made by Mr Belhaj and his wife being heard in public.
Every other legal battle over alleged British involvement in complicity in rendition has stopped before the actual claims – and the government’s defence – have been tested in open court.
Ministers paid out millions of pounds in compensation to former Guantanamo Bay detainees to prevent just such material being aired.
The legal effects of this judgement go a lot further than the specifics of the Belhaj case.
Our highest court has said that even if another state is primarily responsible for the claimed wrongdoing, there’s no reason to stop the facts being heard in our courts if there are serious allegations that the UK was somehow involved.
Damage to international relations and the potential embarrassment of secret agencies do not trump Magna Carta or English law’s ban on torture.
Will all the facts be heard? We don’t yet know.
If the government doesn’t want to apologise, it has one last card. It may now apply for the whole case to be heard in secret. And that could mean another legal battle going on for years to come.
The Supreme Court justices also gave the green light to a related but separate case brought by Yunus Rahmatullah, a Pakistani man suspected of being linked to al-Qaeda, who says the UK illegally handed him over to US forces in Iraq, also in 2004.
A government spokeswoman said it would consider the detail and implications of both rulings but it would be inappropriate to comment further because of the ongoing proceedings.
Mr Belhaj’s damages action is based on documents uncovered in Tripoli following the fall of Colonel Gaddafi in 2011.
The papers show that, in 2004, MI6 communicated with the Libyan regime over the fate of Mr Belhaj, who had fled the country to live in China.
According to the papers, MI6 tipped off the Libyan regime after becoming aware he and his wife had been deported to Kuala Lumpur, where they were detained for two weeks by local authorities.
They were later put on a commercial flight to London but were taken off the aircraft at Bangkok and handed over to the US.
In one of the documents, Sir Mark Allen, MI6’s then head of counter-terrorism, tells a Libyan intelligence official that Mr Belhaj’s capture had been possible only thanks to British intelligence.
The government has neither confirmed nor denied whether the documents are genuine.
The Court of Appeal ruling in 2014 said Mr Belhaj’s allegations concerned “particularly grave violations of international law and human rights” and should be heard.
In its unanimous judgement, the seven Supreme Court justices dismissed the government’s attempts to stop the case going ahead to trial at the High Court, saying that the Magna Carta was on the side of Mr Belhaj and his Moroccan-born wife.
Lord Mance said: “English law recognises the existence of fundamental rights, some long-standing, others more recently developed.
“Among the most long-standing and fundamental are those represented by the Magna Carta which reads, ‘No free man shall be taken, or imprisoned… excepting by legal judgement of his peers of the land’.”
Prosecutors last year said there was insufficient evidence to charge anyone from MI6 with a criminal offence.
Sapna Malik, of law firm Leigh Day which is representing Mr Belhaj, said the Supreme Court had “clearly declared that the UK courts must not refrain from deciding such cases which may involve criticism of the conduct of foreign states”.
Cori Crider, from human rights organisation Reprieve, said: “The government bought years of delay by wasting hundreds of thousands of pounds on this appeal, when a simple apology would have closed the case.”