A ruling yesterday by the UK's highest court will cost the insurance industry billions of pounds and open the way to compensation for thousands of people who develop fatal lung cancer through exposure to asbestos.

The ruling by five law lords is expected to cost insurers between £6bn and £8bn in compensation for sufferers from mesothelioma and the families of those who died from the disease.

The law lords delivered their judgment, described by one lawyer as the most significant in the history of industrial disease compensation, a few days after the hearing, to reassure dying victims who wanted to know their families would be provided for. They will deliver their detailed reasons later.

The judgement overturns one by the court of appeal last December barring compensation claims by workers exposed to asbestos by more than one employer. The court ruled that, because claimants could not prove which asbestos fibre led to the disease, no employer could be held liable. The disease can take 20 to 30 years to manifest itself. Deaths from asbestos-related illnesses are expected to reach 10,000 a year by 2010.

Ucatt, the construction union, backed a claim by Judith Fairchild of Leeds, widow of Arthur Fairchild, who died of mesothelioma in 1996. He was exposed to asbestos while working for Leeds city council and the games makers Waddington's.

Mrs Fairchild's claim had been rejected by the high court and the appeal court, but she will now receive £191,000. Had she lost in the Lords, the union would have faced a bill of up to £1m in legal costs.

She said after the judgment: "We got the right result, not only for myself, but the thousands affected by this awful disease. My husband deserved to win."

The second case was brought by Doreen Fox, widow of Thomas Fox, who worked for Spousal (Midland) Limited and for several employers at Liverpool docks.

The third claimant, Edwin Matthews, 54, from Rochester, Kent, is suffering from mesothelioma and may have only weeks to live. He had been awarded compensation of £155,000 by the high court, but this was overturned by the court of appeal.

Mr Matthews, a former factory worker, brought his claim against two employers, Associated Portland Cement manufacturers and British Uralite.

Some 500 claims that had been frozen pending the outcome of the test cases will now be settled.

Mesothelioma, whose only known cause is asbestos, can be caused by a single asbestos fibre. There is no way of proving which exposure was to blame, if workers were exposed to the dust by more than one employer.

George Brumwell, general secretary of Ucatt, said it had been an historic victory. "This judgment will help tens of thousands of sufferers from the asbestos-related disease mesothelioma, and will teach the insurance industry a lesson it will never forget.

"When our case lost in the high court and the court of appeal, the insurance industry was congratulating itself that the 'asbestos problem' as they saw it had been put to bed. Insurance companies have to accept their responsibilities. They have been shamed by this decision.

"The judgment is indeed a landmark, and will change the lives of hundreds who are suffering, and the thousands to follow them."

John Parker, head of general insurance at the Association of British Insurers, said: "Insurers will welcome the clarity provided by today's ruling.

"It is good that the judicial process has reached a definitive conclusion."