Anti-papal activists in Australia have won permission to annoy Catholic pilgrims at the World Youth Day celebrations in Sydney after a court upheld their right to hand out condoms and coat hangers.

The decision, by the Federal Court, strikes down a law introduced by the state of New South Wales that would have fined anyone “causing annoyance” to the estimated 225,000 pilgrims who have flocked to Sydney to celebrate with Pope Benedict XVI. The fines could have been up to A$5,500 (£2,700).

As soon as the court had given its ruling, Rachel Evans, one of two protesters from the No To Pope Coalition who brought the case, started handing out condoms to pilgrims. “We’re not seeking to annoy or inconvenience anyone,” she said, wearing a T-shirt declaring: “The Pope is wrong, put a condom on.”

Many Catholics took exception to her handouts, Ms Evans added, but others accepted them. “We welcome the Catholic youth. We’re going to talk to them about how we oppose the conservative contraception policy of the Pope.”

The New South Wales government had claimed that the new regulations extended to police the same rights to suppress trouble as they already had for big sporting events. It emphasised that a ban on causing inconvenience remained in force.

Ms Evans and another student activist, Amber Pike, argued that the law was unconstitutional because it infringed their right to peaceful protest. The judges ruled that the attempt to regulate annoying behaviour would affect freedom of speech because of uncertainty about how it could be defined.

“The statement from the judges was very clear,” Ms Evans said. “We have the right to peaceful assembly and these annoyance laws contravene that right. The judges specifically said condoms, T-shirts, coat hangers and so on.”

Protesters are handing out coat hangers as a reference to backstreet abortions — a consequence, they say, of Catholic opposition to contraception and abortion.

The ruling coincided with the start of the week-long youth festival yesterday at a Mass near Sydney Harbour that was attended by more than 150,000 people, with Cardinal George Pell, the Archbishop of Sydney, delivering the homily.

More than half a million worshippers are expected to be at the closing Mass on Sunday, which will be attended by Benedict XVI.

The protesters hope that the court decision will boost numbers at a rally on Saturday where they plan to wear T-shirts condemning the Pope and hand out condoms and leaflets.