M&S wants to flatten Orchard House and replace it, claiming the redevelopment was “of fundamental importance” to the future of London’s West End.
Westminster City Council originally approved M&S’ plans to tear down the current art deco building and replace it with a modernised shop featuring a new café, offices and a gym in 2021.
But the decision was met with resistance from campaigners which prompted Mr Gove to launch an inquiry and eventually block the proposals.
Mr Gove had said the building should be refurbished rather than demolished and that demolition would negatively impact nearby heritage assets, including the Grade II* listed Selfridges store directly opposite.
Barristers for M&S told a hearing earlier in February that Mr Gove had “misunderstood and misapplied” national planning policy when making his decision.
Mrs Justice Lieven agreed and in her ruling on Friday said: “In my view, it is plain that the secretary of state misinterpreted the national planning policy framework, and therefore erred in law.
“The secretary of state relied on a meaning of the national planning policy framework which is simply not open to him.”
