A rescue plan designed to secure the future of crisis-hit mutual Equitable Life was given the legal all-clear today.

The ruling opens the way for a £250 million injection from Halifax.

The High Court sanctioned a compromise "scheme of arrangement" which won the approval of 98% of with-profits policyholders at meetings held last month.

Halifax, now part of the HBOS group, bought the mutual society's assets for £500 million last year and offered to inject £250 million if a compromise deal was in place by March 1.

Mr Justice Lloyd said today that, despite objections from 30 dissenters, he was satisfied the scheme was one of which an "intelligent and honest man", acting in his own interests, might reasonably approve.

Under the scheme, holders of guaranteed pensions policies will give up their rates in return for a one-off 17.5% increase in the value of their policies.

Other policy holders will be given a 2.5% uplift in return for agreeing not to sue the society for alleged mis-selling.

The 240-year-old society's problems came to a head when it lost the final round of a legal dispute over the rights of its guaranteed policyholders, whose policies had become too expensive to honour when interest rates and inflation fell.

Equitable tried to get round the problem by paying a smaller final bonus on the policies, but after a long legal battle the House of Lords ruled that the society had to meet the guarantees, leaving it with a £1.06 billion liability.