Canada's attorney general and minister of health have lost their appeal of a court ruling on Vancouver's controversial supervised injection site, raising proponents' hopes that similar facilities will now open in other cities.

The B.C. Appeal Court rejected Ottawa's appeal in a unanimous ruling announced Friday.

Dr. Julio Montaner, director of the B.C. Centre for Excellence in HIV-AIDS, said the decision sends a clear message that Prime Minister Stephen Harper should abandon "his draconian, ideologically motivated public health policy-making" and embrace evidence-based research to continue operating the clinic, called Insite.

Montaner said he's had discussions with officials in Montreal, Toronto, Victoria and San Francisco about those cities having their own clinics modelled after Insite.

"There is tremendous interest in a number of cities around the world based on the fact that not only have we piloted this initiative but the supervised injection site is the best studied in the world," he said.

Chief Justice Lance Finch walked into an overflowing courtroom for Friday's announcement. About 50 supporters of the clinic jammed into the room and spilling outside applauded after Finch read the ruling.

"It's a clean sweep," said lawyer Joe Arvay, who represented the Portland Hotel Society, which runs Insite, and helped launch the original court action against the federal government.

"Let's just say that one hopes that they (the government) will accept the decision of the court, which is obviously very well thought out and considered."

Drug users bring their own drugs to the clinic, where can they can inject them under the supervision of a nurse. It opened in 2003 as part of a harm-reduction plan to tackle an epidemic of HIV-AIDS and drug overdose deaths.

Montaner said that since the facility opened, there's been a 30 per cent increase in the number of addicts who enter detox.

The federal government had sought to overturn an earlier B.C. Supreme Court decision that struck down parts of Canada's drug laws, after finding that the Controlled Drugs and Substances Act was not in line with the Charter of Rights and Freedoms.

The lower court ruling gave Insite immediate constitutional exemption to stay open without a federal exemption from drug laws. Insite supporters had launched the court action out of fear that the Conservative government was not going to renew the exemption when it expired at the end of June 2008.

Federal lawyers had argued that it's policy issue, not a legal one, but the appeal court disagreed.

Dean Wilson, one of two original plaintiffs in the case, said outside the court that the victory makes it clear that Insite provides a "common-sense approach" to those battling drug addiction.

"It's working, it's working, that's all I can say," said Wilson, who was the first person to use Insite, which he regards as a critical harm-reduction facility that protects people's health.

"Now other provinces can use this as case law and do their thing," said Wilson, who said he's also used Insite's detox facility, called Onsite, and lived in transitional housing.

Well-organizers supporters of Insite placed four large posters outside the court, with photos of babies and young children on bicycles and rocking horses over captions that read: "Before they were junkies they were kids. Support Insite."

No one from the federal Attorney General or the Health Ministry was immediately available for comment.

The federal government could appeal the decision to the Supreme Court of Canada, but Arvay said the Conservatives would be wasting more money by doing so.

"Why waste taxpayers with an appeal, especially when that money could be used to help the most vulnerable people in the city, in the Downtown Eastside?" he said.

The appeal court ruled that the federal government must pay the court costs for those who have fought to keep the facility open since it began operating.

Camille Bains reports for the Canadian Press