The Charity Commission faces a judicial review of its decision to ask two charities not to fund a group linked to Daesh terrorist Mohammed Emwazi.

The Commission had asked the Joseph Rowntree Charitable Trust (JRCT) and the Roddick Foundation never to fund Cage again after details of its connections with Emwazi came to light when he was uncovered as “Jihadi John”.

In March the JC revealed that the Community Security Trust had alerted JRCT to antisemitic material on Cage’s website in July 2013. At that time the JRCT had given Cage more than £300,000.

Cage called for a judicial review and the High Court agreed on Thursday to grant the review. The next hearing will take place in October.

The Charity Commission responded to the court decision by saying said Cage was not a charity and that the commission had been seeking assurances following public anger and concern. Its contact with the JRCT and the Roddick Foundation had been to ensure their trustees were complying with legal duties.

“We look forward to explaining to the court why the commission’s engagement with these charities was firmly within our powers,” the commission said in a statement.

Cage director Adnan Siddiqui also welcomed the court decision and said: “The Charity Commission’s actions against Cage have sent a chill through the charity sector, and this is a welcome step in the right direction for all members of civil society.”

CST had warned the JRCT about Cage’s attitude to antisemitism, links to Abu Qatada, and articles on the Cage website which claimed the September 11 attacks in New York were an insurance scam organised by a Zionist billionaire.

David Cameron attacked the group in his major speech on extremism last week , criticising the National Union of Students for its decision to “ally” with Cage . The Prime Minister’s comments could be challenged for defamation, Cage claimed.