The daughters of a naval gunner who died when his ship was torpedoed in the war have been allowed to try and have the wreck protected as a war grave.

Rosemary Fogg was 12 and her sister Valerie Ledgard just four when Petty Officer James Varndell, 44, died with 20 others on the SS Storaa in November 1943.

The merchant navy ship was carrying steel to a weapons factory in Cardiff when it was sunk in the English Channel, ten miles south of Hastings.

Since then the merchant vessel has lain in 100ft of water off the Sussex coast, accessible to divers who have identified human remnants on the vessel's decks.

The ship, which was protected by cannon, machine guns and rockets, had a total of 37 crew on board - many of them Danes who had volunteered to serve under the Union Jack.

In 1985 the Ministry of Defence sold the salvage rights to divers from Hastings Sub Aqua Association for £150.

Mrs Fogg and Mrs Ledgard, who both live in Worthing, want to bring judicial review proceedings of the MoD's decision, taken last October, that the vessel was incapable of designation under the 1986 Protection of Military Remains Act.

They say that it was wrong to conclude that the ship - which was armed, sailing in convoy, and had already beaten off one attack before it was hit - did not qualify for consideration under the definition of "military service".

Yesterday Mr Justice Sullivan, sitting at London's High Court, gave permission for the case to proceed.

He said that it was a most unusual and sensitive case which was both arguable and of wider general public importance.

He also made a protective costs order in favour of the sisters after hearing that their limited financial resources meant they could not pursue the case if exposed to the risk of paying the significant legal expenses involved.

He also directed that John Short, the part-owner of the wreck, should be joined to the action as an interested party.

Mr Short told the judge that the MoD sold it to him without any conditions, giving him legal ownership and the right to dive.

He said: "I consider they now have no jurisdiction over the wreck to make it a war grave.

"If they do, they take away my legal rights to dive and salvage the vessel, which can't be right."

After the hearing Mrs Ledgard said that they wanted recognition for their father, who had gone to sea as a boy and had been a volunteer reserve.

She said: "It's a very good thing that this type of case can come to court for consideration because there are thousands of merchant ships all around the coastline which were sent down during the war and at the moment they have no specific protection.

"Although this case is only about SS Storaa, it will potentially have a wider effect on the other wrecks and graves."

Dr Peter Marsden, an expert on shipwreck archaeology, who has championed the case, said that more than 30,000 men had died in merchant ships in the Second World War.

He said: "Not one of their graves is recognised by law.

"We have come here asking for protection for one man in one ship and the MoD is obviously unhappy about what we are doing because of the implications."

The case is unlikely to come back to court before the end of the summer.

The Argus reported in 2000 how the Shipwreck Heritage Centre in Hastings was fighting to turn the wreck into a war grave to stop an aggregates firm plundering the seabed to extract millions of tonnes of gravel.