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Thousands of construction workers and their families have lost their right to full compensation for asbestos-related cancer after a ruling in the House of Lords.

Compensation will be limited in cases involving several employers where blame for the onset of the illness cannot be pinned on one of the companies. Previously full damages could be claimed against one firm if it was not possible to sue all culpable parties.

Employers in the case of Barker vs Corus UK Ltd won their appeal against a decision to award Sylvia Barker £152,000 in compensation for the death of her husband from mesothelioma in 1996 aged 57. Corus successfully argued that it should be liable for only part of a claim if a worker was exposed to asbestos in more than one workplace.

The Lords' decision, affecting millions of pounds worth of claims, will dramatically cut employers' compensation liability.

James Thompson, from solicitor Pickering & Partners which represented Mrs Barker, said: "The lords seem to be saying that employers can be excused paying in full for their past law-breaking activities while their insurers and their shareholders will get a multimillion-pound windfall, even though in the UK they can well afford to pay full asbestos compensation. Severe financial hardship will result from individual awards being slashed by tens of thousands of pounds. We call on parliament to correct this massive injustice."

Mrs Barker's damages will now be reassessed to reflect the proportion of blame attributable to John Summers & Sons Ltd, where he worked during the 1960s. Liabilities for Summers now rests with Corus UK.

In 2002 the law lords ruled that an employer who exposed a worker to asbestos could be fully liable, even in cases where the employee had worked for several companies and it could not be proved which had caused the illness.