America's big cigarette makers must stop describing their products as "low tar," "light," "ultra light" or "mild," according to the decision of a long-running legal battle with the US Government - but they will not have to pay billions of dollars on campaigns to stop people smoking.

Although the US Department of Justice formally won the case, the judge, US District Judge Gladys Kessler, said she could not force the tobacco makers to pay for $14 billion (£7.4 billion) of anti-smoking remedies because of an appeal ruling in a separate case that limited their financial liabilities.

Instead, the tobacco companies, which include Philip Morris USA, RJ Reynolds Tobacco Company and British American Tobacco, will have to change their labels, put all the documents used in the seven-year case on their websites until 2016 and take out television and full-page newspaper advertisements to explain the changes.

The punishments, set out alongside Judge Kessler's strongly worded ruling — she found that the companies deliberately set out to "increase and perpetuate addiction" — were widely perceived as little more than a slap on the wrist for the tobacco companies.

In late afternoon trading, shares in Altria, the parent company of Philip Morris, gained over 3 percent, Reynolds rose over 2 percent, while Carolina Group, the owners of Lorillard Tobacco, another of the defendants, was up over 1 percent.

"Although they lost, they won. It’s a victory for the tobacco companies," Tim Ghriskey, chief investment officer at Solaris Asset Management, told Reuters.

The 1,653-page ruling was the culmination of a civil case brought the Department of Justice in 1999 in the wake of the massive settlements made by the American tobacco industry to individual states in the mid-1990s. The largest firms paid a total of $246 billion (£130 billion) in compensation for deceiving customers about the harmful effects of smoking.

In her ruling, Judge Kessler agreed that the big tobacco companies had systematically sought to hide the true effects of smoking from consumers, particularly through the marketing of so-called "light" cigarettes.

The Government had prosecuted the companies under the Rico Act, anti-racketeering legislation introduced in the 1970s to extract large financial penalties from gangsters.

"They distorted the truth about low tar and light cigarettes so as to discourage smokers from quitting," she wrote. "They suppressed research. They destroyed documents. They manipulated the use of nicotine so as to increase and perpetuate addiction."

The companies pursued profits "with little, if any, regard for individual illness and suffering, soaring health costs, or the integrity of the legal system," Judge Kessler found.

Officials at the Department of Justice had originally advised that the tobacco industry should pay $130 billion (£69 billion) to fund a national campaign to reduce the size of America's smoking population. Prosecutors had also wanted the court to impose fines on big cigarette companies if youth smoking rates failed to fall.

The scale of the prosecution was brought down by Robert McCallum, a former associate attorney general appointed by President George Bush, who said that the Government should seek the more realistic target of a ten-year, $14 billion campaign.

But last night that came to nothing, when Judge Kessler ruled that she was bound by a February 2005 ruling of the US Court of Appeals that decided that the Government could not force the tobacco industry to pay any more for its bad behaviour in the past. Instead, the companies will just have to pick up the Government's estimated legal bill of around $140 million (£74 million).

Mark Smith, a spokesman for RJ Reynolds Tobacco Co., said the company was "gratified that the court did not award unjustified and extraordinarily expensive monetary penalties" but would analyse the labelling decision to see if there were grounds for appeal.

The Justice Department expressed disappointment that its proposed campaign would not materialise. "Nevertheless, we are hopeful that the remedies that were imposed by the court can have a significant, positive impact on the health of the American public," the department said.

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