The judgement, against Wakefield Metropolitan Council, will force local authorities to recontact every resident over the age of 18 for permission to include their names in electronic copies of the electoral roll.
The judgement effectively outlaws the sale of the electoral register to credit reference agencies, banks, marketing companies and other commercial organisations, unless voters give their explicit permission for their names to be included on the list.
The ruling has left councils, which are obliged by law to make copies of the electoral register available to businesses for a nominal fee, facing significant extra costs, the Electoral Commission said this week.
"The financial burden inherent in the obligation to consult all registered electors could be a significant one and for many local authorities this could prove a major burden," the commission said in emergency guidance sent to local authorities.
The commission is pressing the Government either to make extra funds available to local authorities or to take other steps, such as changing regulations to lift the financial burden on local authorities.
It has urged local authorities to withhold copies of the electoral roll while discussions are in progress, but has stopped short of offering definitive legal advice.
Banks and credit reference companies are concerned that the ruling will make it difficult for financial institutions to offer credit to their customers, or to carry out checks for fraud and statutory checks for money laundering.
Some organisations have threatened to sue local authorities if they continue to withhold data, the Electoral Commission said.