A claim by an unpaid volunteer that she was protected by anti-discrimination laws was rejected by appeal judges today.

It was alleged that the Mid Sussex Citizens Advice Bureau had discriminated against the woman, identified only as X, on the grounds of disability when she was asked to leave.

Her case was backed by the Equality and Human Rights Commission.

Lawyers involved in the test case said it had been closely watched by organisations that rely on the UK's army of volunteers which number tens of millions.

Had the Court of Appeal backed X then hundreds of organisations would have had to reassess the terms under which volunteers are used.

Lord Justice Elias, in a ruling today, said that although the case was about disability, if X was protected as she claimed, it would mean volunteers would also be covered by discrimination laws on race, sex, sexual orientation, religion and age.

Lord Elias and two other judges unanimously held that the Disability Discrimination Act and European Framework Directive did not cover X , because she did not have a contract with the CAB and was unpaid.

Counsel Jason Galbraith-Marten from employment and discrimination chambers Cloisters, whose barristers Paul Michell and Ed Williams represented the CAB, said: "This is a significant victory for the voluntary sector.

"This is because much of the sector is reliant on volunteers and cannot shoulder the financial burden which enhanced rights for volunteers such as X would bring.

"Many organisations that use the services of volunteers are small-scale, reliant on charitable contributions and unable to function at all without 'voluntary workers'.

"To give new rights to the millions of volunteers who work without pay or a contract would therefore make it impossible for such organisations. The need to make adjustments for the disabled, and the cost of litigation (successful or otherwise) which would be generated by the extension of anti-discrimination rights, would be too great a financial burden for many of them to bear."

The case involved the Court of Appeal examining for the first time the meaning of the words "employment" and "occupation" under EU discrimination law.

Lord Justice Elias said: "In particular, I wholly reject the premise underpinning the submission of both the appellant and the Commission that because the principle of non-discrimination is so important in EU law, the only reasonable inference is that the Directive was intended to apply to volunteers.

"The logic of that argument is that the principle should apply to all fields of human activity, but no-one suggests that this is the case."

He added: "Volunteers are extensively employed throughout Europe and it is unrealistic to believe that they were intended to be covered by concepts of employment and occupation which would not naturally embrace them.

"The concept of worker has been restricted to persons who are remunerated for what they do. The concept of occupation is essentially an overlapping one, and I see no reason to suppose that it was intended to cover non-remunerated work."