The government "misled" the High Court over its decision to refuse unaccompanied child refugees in Calais the right to join their families in the UK, says the Court of Appeal.
The ruling revealed Home Office lawyers gave advice on how to avoid legal challenges by not giving children reasons for their refusal.
As a result, over 500 children were rejected and "many" are now missing.
The Home Office said it had "noted the criticisms" and were reviewing them.
Yvette Cooper MP, chair of the Home Affairs Select Committee, described the Home Office's actions as a "shocking denial of children's rights".
The demolition of the "Jungle" refugee camp in Calais was ordered in October 2016, when Amber Rudd was Home Secretary.
Truly, truly shocking. Home Office lawyers appear to have deliberately advised against giving child & teen refugees in France the reasons why they were refused family reunion with relatives in UK to prevent them appealing against decision. Level of inhumanity in this is appalling https://t.co/wAiO3ZtZWk— Yvette Cooper (@YvetteCooperMP) July 31, 2018
As a result of the closure, the government conducted over 1,000 interviews with unaccompanied children who claimed to have family in the UK.
Around 550 were brought to the country - but over 500 were rejected.
Many of them then went missing from the French centres they were living in.
The court ruling said the Home Office's process for refusing to transfer the children was "unfair and unlawful".
It said failures in the system were prejudicial to the children, who had no realistic prospect of challenging the rejections.
Lord Justice Singh added that not presenting the evidence - namely emails showing the lawyer's advice - to the High Court hearing was "a serious breach of the duty of candour and co-operation".
Charity Safe Passage - part of the community organising group Citizens UK - first took the case to the High Court in September to challenge the Home Office and the way it dealt with the unaccompanied child refugees.
The court ruled in favour of the government, saying it had acted lawfully in not providing full reasons.
It said, despite "serious shortcomings" in the processes of assessing the applications, the department was "justified" due to the time frame and urgent conditions the UK was working under after the clearance of the camp was announced.
But on Tuesday, the Court of Appeal overturned High Court's decision, saying the judge had been given an "incomplete picture" by the government and a "great deal of important evidence" was not brought to the court's attention.
The evidence came in the form of emails between the UK Border Force and the French authorities - disclosed in another case being mounted by Citizens UK - detailing the lawyer's advice to not provide reasons for refusal to avoid legal challenges.
The emails also showed that French officials wanted the children to be given an adequate explanation - despite the government previously presenting evidence that the authorities only required "sparse" detail.
Lord Justice Singh said: "In my judgment, the process which was adopted by the secretary of state in the present context failed to comply with the requirements of procedural fairness as a matter of common law."
Ms Cooper said : "Everyone knows the Home Office gets decisions wrong, but these teenagers and children weren't even told the reasons why, so they or their families could challenge basic mistakes.
"The result was many of those teenagers and children disappeared again - very possibly straight back into the arms of smugglers, traffickers and abusers."
Sonal Ghelani of the Islington Law Centre, which worked on the appeal, said it was "extremely disturbing" for the Home Office to act in the way it did.
Calling for an investigation into the Home Office's actions, she added: "Public authorities have a duty of candour to provide the court with a full and accurate explanation of all the facts but we now know there was a serious breach of the duty of candour in this case."
Beth Gardiner-Smith, project lead for Safe Passage, added: "Tragically, many of the children that were refused by the government with no good reason have since gone missing from French authorities' care, and we have little to no information on their whereabouts or wellbeing.
"Today's judgment reveals not only the failure of the Home Office to comply with law but also its abysmal disregard for the safety and welfare of incredibly vulnerable children."
A Home Office spokesperson said the UK had worked with France to expedite the transfer of vulnerable unaccompanied children from Calais in October 2016 in response to an "urgent humanitarian situation" and their priority was to "provide safe passage for children".
The spokesperson added: "The court agreed that the process operated by the government was outside of its existing obligations under EU law.
"However, we note the criticisms contained within the wider ruling and are currently reviewing these with our legal team."
A French Senate report from July 2017 found that 709 children removed during the clearances of the camps in Calais had subsequently gone missing from French care shelters.