The Opposition accused the government of using the appointment of Parliamentary Secretaries to prop up their support and effectively become a majority.
Opposition Leader Ishmael Kalsakau said it was against the spirit of the Constitution and against the rights of MPs.
He welcomed the latest ruling, calling it 'a victory for the people of Vanuatu.'
"It has been abundantly clear from the very beginning, now reinforced by this Court of Appeal judgement, that the Prime Minister does not have the power that he believes he does by making those unconstitutional and illegal appointments," Mr Kalsakau said.
"We're delighted but we believe it's a victory for the people."
However, Mr Kalsakau warned that more legal action could follow.
"Using public monies outside the Public Finance Act is not to be tolerated at all. Now that is the message we want to take back to the court because we believe that the court wasn't given the opportunity to comment on those provisions, those enactments and that process".
Photo file Caption: Opposition Leader Ishmael Kalsakau