The government has launched an urgent bid to overturn a High Court ruling that has hit its plans to cut subsidies for solar panels on homes.

Energy secretary Chris Huhne wants to reduce feed-in tariff subsidies (FITs) - payments made to households and communities that generate green electricity through solar panels - on any installations completed after December 12 last year.

But just before Christmas, Mr Justice Mitting ruled that it would be unlawful for the minister to carry out his plan to implement the cuts in April this year by referring back to the December 12 deadline last year, which had fallen in the middle of a consultation period.

The energy secretary was entitled to make modifications for "the statutory purpose" of promoting small-scale, low-carbon electricity-generating schemes but changes made by reference to the earlier date of December 12 were not, in his judgment, "calculated to further that statutory purpose".

His decision was a victory for environmental campaigners Friends of the Earth (FoE) and two solar companies - Solarcentury and HomeSun - who said the plans to halve subsidies were creating "huge economic uncertainty" for the small-scale solar energy industry.

But today, Jonathan Swift QC, acting for Huhne, told Lord Justice Lloyd, Lord Justice Moses and Lord Justice Richards in the Court of Appeal that the judge had misunderstood the scope and purpose of the FIT scheme.

The scope of the Secretary of State's power under section 41 of the 2008 Energy Act - by which the case stood or fell - was widely drawn and expressly included provision to make modifications as to the circumstances in which payments were made and the calculation of the amount of any such payment.

The government wants to hurry in tariff reductions because it believes the current subsidies are too generous and will "severely deplete resources for future solar PV generators, or for other technologies".

After the High Court ruling, a spokesman said: "Without an urgent reduction in the current tariffs, which give a very generous return, the budget for the scheme would be severely depleted and there would be very little available for future solar PV generators, or for other technologies.

"Our view is that the urgent steps we have proposed to protect the scheme for the future are fully consistent with the scheme's statutory purpose."

FoE and the two companies have agreed that the appeal, which they are contesting, is urgent.

Counsel Sam Grodzinski QC said: "Until the lawfulness of the secretary of state's proposal is finally resolved by the courts, those still wishing to participate in that industry cannot know the economic consequences of doing so.

"This means that many projects have already been abandoned and many jobs have been lost; and the longer the uncertainty continues, the greater the number of businesses and jobs put at risk."

The hearing is expected to end late this afternoon with the possibility of a decision delayed until early next week.