Certain past minor cautions and convictions should remain part of a protected private life and not have to be disclosed in criminal record checks, the Supreme Court has ruled.
Judges said any requirement to do so would be incompatible with human rights legislation in England and Wales.
The Supreme Court decision upholds a ruling by the Court of Appeal.
The case involved a man applying for a job who was forced to reveal two police cautions he had received aged 11.
The man, known as "T", said he had been forced to disclose warnings he received from Greater Manchester Police in connection with two stolen bikes.
His records were checked when he applied for a part-time job at a football club aged 17 and later for a university course in sports studies.
His case was supported by the human rights group Liberty.
A woman, identified as "JB", also challenged the checks after she was refused a job in a care home eight years after she received a caution for shoplifting.
Making their ruling, the Supreme Court judges said the disclosures T and JB had been required to make "were not necessary in a democratic society" and "were not based on any rational assessment of risk".
Filtering systemAround four million people apply for a criminal records check every year.
Last year, three Court of Appeal judges said the blanket checks could breach the right to a private or family life.
After that ruling, the judges said it would be a matter for Parliament to decide what amendments to make to records check rules.
The Home Office has since introduced a system to filter out single minor convictions or cautions.
But the government pursued an appeal against the Court of Appeal ruling, saying the "protection of children and vulnerable groups must not be compromised".
Working with childrenThe Supreme Court - the highest court in the UK and the final court of appeal in cases of public importance - heard the case on 9 December but has only just announced its decision to rule against the government.
The BBC's legal affairs correspondent, Clive Coleman, said the net effect of Wednesday's ruling was that the law would remain as it was.
However, he said the decision could be relevant for anyone applying for a job, especially if it involved working with children or vulnerable people.
Under the new filtering system, cautions given to adults are removed from criminal records checks after six years.
Cautions to children are filtered out after two years.
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