Patricia McCarthy Rodriguez can now make her regular visits to the UK - where her husband and children are citizens - without applying for a visa which takes weeks or months to be granted.
The ruling from judges at the European court of Justice means potentially opens Britain's borders to large numbers of people from outside the EU who could come to the UK without visas.
McCarthy Rodriguez is a Colombian citizen and is living in Spain with her British family.
She claimed she should be allowed to travel to the UK with her husband Sean McCarthy and their children without having to obtain a visa, because she holds an EU Residence Card issued by the Spanish government.
Previously, the British Government demanded that Mrs McCarthy obtain a "family permit" visa every six months to travel to the UK, meaning she had to journey from the family home in Marbella to the British Embassy in Madrid to be fingerprinted and fill out detailed application forms for each trip.
The process takes weeks, even months, her lawyers said.
The court in Luxembourg ruled in the family's favour, waving her need for a visa.
But Conservative and Ukip MEPs reacted with outrage at the decision.
Tory MEP Timothy Kirkhope, spokesman on justice and home affairs, said: "Britain will always be best placed to decide and deal with its own immigration needs - not a judge in Luxembourg.
"We must have a system robust enough to prevent abuse and flexible enough to assess each case on its merits. Most of all we need a visa system controlled by the UK and not the EU."
The McCarthys have two young daughters, who are both British citizens.
The McCarthys took action against the UK Government under the European Union's freedom of movement rules, arguing that Mrs McCarthy should not have to apply for a visa every time she wants to travel.
The win could potentially open Britain's borders to large numbers of non-EU nationals who live with EU citizens who have exercised their freedom of movement rights across the continent.
Ukip MEP and spokesman on immigration Steven Woolfe said the ECJ ruling strikes another blow against the UK's power to control its borders.
Mr Woolfe said: "Britain will be forced to recognise residence permits issued by any EU member state, even though the system of permits is wide open to abuse and fraud.
"This ruling extends the so-called 'right to free movement' to millions of people from anywhere in the world who don't have citizenship of any country of the EU.
"This is yet more proof that Britain can never take back control of its borders as long as it remains in the European Union."
He went on: "This makes claims by David Cameron that he can control migration from within the EU look even more absurd.
"The ECJ, like every other EU institution, is determined that Britain will never take back control of its borders. That is a non-negotiable principle of the European treaties. For Cameron to pretend otherwise is naive or dishonest or both."
Mr McCarthy said: "I'm overjoyed at the news from Luxembourg. It's been a five-year battle for our family to be treated fairly and with dignity by the UK.
"As a British national I had expected my country to play by the rules, and now the court has finally forced the UK to respect British and European citizens' free movement rights."
Conservative MP Dominic Grieve, when he was attorney general, tried to argue that the UK was entitled to invoke the visa regime to allay concerns about other EU member states' residence cards, as some allegedly do not meet international security standards and are open to abuse.
But UK legislation requires an entry permit to be obtained before entry into the UK even where the authorities do not consider that the family member of an EU citizen may be involved in an abuse of rights or fraud.
ECJ judges said the fact that a member state is faced with a high number of cases of abuse of rights or fraud committed by non-EU nationals - as the UK claims - cannot justify a sweeping measure to exclude family members of EU citizens.
The judges said the UK is able to assess documentation for signs of fraud or abuse at the border and if fraud is proven they can exclude an individual.
But they added that the UK is "not permitted to determine the conditions for entry of persons who have a right of entry under EU law or to impose upon them extra conditions for entry or conditions other than those provided for by EU law".
A Government spokesman said: "The UK is disappointed with the judgment in this case. It is right to tackle fraud and the abuse of free movement rights.
"As the case is still to return to the UK's High Court for a final judgment, it would be inappropriate to comment further at this time."
Britain is bound by the ECJ ruling.
Free movement rules have been at the heart of the debate over immigration in Britain and whether the country should remain a member of the EU.
In October, David Cameron promised tough new restrictions to stem the flow of EU citizens to Britain, including a block on EU migrants claiming welfare for the first four years after they arrive in the country.
However, the Prime Minister insisted he rules ''nothing out'' if British demands for change fall on deaf ears, and warned that welfare reforms will be an ''absolute requirement'' in the renegotiation that would be held ahead of his planned referendum on EU membership.