In his decision, Justice Andre F.J. Scott sides with a coalition of 26 bands from New Brunswick, Nova Scotia and P.E.I. against the federal department.
The department proposed to change the assistance rules for New Brunswick reserves to mirror standards set by the province.
The bands argued that these changes were brought in without real consultation or procedural fairness and would cut benefits on reserves.
They argued that provincial welfare recipients had access to other provincial programs and subsidies not available on reserves.
The ruling in their favour leaned heavily on the lack of procedural fairness.
Scott said the department did not fully assess the impact of the proposed changes when it produced a new manual setting out the new criteria.
"It is obvious to this court that the applicants were owed more procedural fairness," he wrote.
"It is clear from the evidence that there was never any meaningful consultation about the merits of the manual before it was developed and implemented.
"The First Nations affected by the decision were not afforded the opportunity to 'put forward their views and evidence fully and have them considered by the decision-maker'."
The federal government, he wrote, breached its duty to observe procedural fairness.
"The recipients of social assistance are the most vulnerable in society and yet a decision affecting a number of them is made without any true comprehension of its impact."
The department proposed the changes in 2011 and wanted to impose them in 2012. However, another Federal Court judge granted an injunction against the imposition in early 2012, pending the outcome of the larger case decided by Scott.