A LAW Lords ruling will lead to big cuts in compensation paid to the families of many victims of the deadly asbestos cancer mesothelioma.

The House of Lords has upheld three test appeals lodged by company insurers, who argued that payments should be limited for workers who had several employers because none of the firms could be specifically blamed for the onset of the disease.

Four years ago, the Law Lords ruled that an employer who negligently exposed a worker to asbestos could be held 100 per cent liable, even if the employee had worked for several companies and it could not be proved which of them caused the illness.

The ruling was made against a background in which many employers had gone out of business before mesothelioma, which takes many years to develop, had become apparent in former employees.

In yesterday's appeal, it was contended that an employer's liability should be limited on a percentage basis, reflecting the extent to which it contributed to an employee's exposure to asbestos.

The Lords' 4-1 majority judgement covered three cases, including former Sunderland shipyard worker John Murray, who died aged 75.

His widow Mary, 84, was awarded £45,000 compensation two years ago but will now get nothing more than the initial payment of about £20,000.

She said afterwards in a statement: "Justice hasn't been done.''

The ruling was also condemned by lawyers and unions representing the families of victims.

Tom Brennan, North-East regional secretary of the GMB union, said: "We will do all within our power to call upon the Government to introduce legislation so that our members and dependants get the full compensation they deserve. This decision does not do justice to all those who have suffered incapacity and death from exposure to asbestos while carrying out their every day job.''

Ian McFall, head of asbestos litigation for Thompsons Solicitors in Newcastle, who acted for Mrs Murray, said: "On a legal technicality, which will make no sense to most people, the court has deprived our client of full compensation for the death of her husband. The real winner here is the insurance industry, which now stands to save billions of pounds.''

Richard Langton, president of the Association of Personal Injury Lawyers, said he was appalled by the decision.

He said: "These men should never have been exposed to asbestos in the first place.

"To take away their right to full and just compensation is like saying they contracted the disease through nothing more than bad luck."