Judge Lawrence Collins told lawyers for the families that there was "an arguable case" which should go to a full hearing, expected some time in June or July, reported Agence France-Presse (AFP).
The families were given permission to challenge the British government’s decision in March not to hold independent inquiries into the deaths of their family members in "post-war" Basra, southern Iraq.
They were told in a letter of 26 March that independent inquiries into the deaths would not be held.
The ruling means a court will have to decide whether the deaths were a violation of the European Convention on Human Rights (ECHR) and Britain is, therefore, obliged to launch independent inquiries to establish the causes of death.
Collins also allowed a further case to be considered at a later full hearing.
Baha Mousa, a28 -year-old hotel receptionist, died after reportedly being beaten by British troops when he was arrested with eight other men in Basra in September.
His case was considered after being highlighted in the International Committee of the Red Cross (ICRC) report at the centre of a scandal over the treatment of Iraqi prisoners by U.S.-led occupation forces.
British Defense Secretary Geoff Hoon told the House of Commons Monday, May10 , that 33 cases of Iraqi civilian deaths, injuries and mistreatment at the hands of British forces had either been investigated or were under investigation.
The families’ lawyers, including Rabinder Singh QC and Phil Shiner, are required now to prove that deaths breached the ECHR.
The British government, however, claimed that the convention does not apply in occupied Iraq, because it is outside the European Union, the BBC News Online reported.
British Armed Forces Minister Adam Ingram told MPs that the government did not believe the human rights convention applied to British soldiers in Iraq.
But Shiner, of the Birmingham-based firm Public Interest Lawyers, maintained that Britain is deemed as an "occupying power" in Iraq.
"If you are an occupying power pursuant to a U.N. Security Council resolution and are responsible for the police and the judiciary, then you have effective control," he elaborated.
"This is the case with the British Government in southern Iraq. It would be very difficult for us to say we don’t have effective control".
The ruling came after London-based Amnesty International released a report, accusing British troops in Iraq killing helpless Iraqi civilians, who posed no apparent threat.
The report said the families of the victims are often misguided and given no or wrong information on how to lodge a compensation claim.
They were told, for instance, that responsibility for compensation would rest with a new Iraqi government.
Apologies by U.S. President George Bush and his ally British Prime Minister Tony Blair have failed to water international outrage over the graphic photos of abused Iraqi prisoners.
One the photos published by the Daily Mirror showed a British soldier urinating on a hooded and handcuffed prisoner.
The photo is backed up by testimony from troops speaking to the paper on condition of anonymity.