The Court of Appeal has ruled that her west London education authority was not to blame.

Pamela Phelps, who left school with a reading age of 10, was awarded the damages last September when the High Court ruled that the London Borough of Hillingdon had negligently failed to diagnose her dyslexia.

The dyslexia test case could have been followed by other ex-pupils seeking damages

In the High Court ruling, the judge accepted that an educational psychologist had shown professional incompetence.

Ms Phelps had claimed that the failure of the education authority to diagnose her dyslexia until two months before leaving school had left with her no chance of qualifications and had consigned her to an adult life stuck in "temporary menial" employment.

The case was seen as significant for many other pupils and former pupils with special educational needs considering damages claims against schools and education authorities.

But today the appeal judges said that it was a "virtually impossible task" for courts to retrospectively determine loss of potential earnings based on speculation about how well pupils might have performed with different teaching.

'Vexatious claims'

Lord Justice Stuart-Smith said that the test case had raised the "serious risk that vexatious claims may be brought against many teachers or educational psychologists many years after the relevant decisions were taken".

The judge warned that "scarce resources" for education could have been spent fighting such cases.

The solicitors who represented Hillingdon council said that this was "a very significant decision. Had the appeal failed, local education authorities would have been faced with investigating circumstances going back over a long period where relevant witnesses and documentation might no longer be available."

A spokesperson for Ms Phelps's solicitors said that the ruling would be a "very real disappointment to all those who suffer from special educational needs and who feel that the current educational system does not afford them sufficient protection when the system breaks down".