The ruling is the first of its kind in Greece and sets the courts on a collision course with the state.

We are completely satisfied, and all those who supported this (case) from the beginning are vindicated.

Internet Cafe Owners Union spokesman

Legislation passed in July banned people from playing video games in public places like internet cafes as part of a drive to stamp out illegal gambling.

The law has been criticised for not making a distinction between interactive gambling and computer games.

The court, in its ruling, said the law was unconstitutional.

About 300 supporters had gathered outside the courtroom in Thessaloniki on Tuesday, chanting "No to censorship on the internet".

Facing jail

Greece's Internet Cafe Owners Union welcomed the ruling.

"We are completely satisfied, and all those who supported this (case) from the beginning are vindicated," union spokesman Dimitris Karanassios said.

The two internet cafe owners and an employee were charged after police found some of their customers playing online chess and the popular multiplayer game, Counter-Strike.

They could have been sent to jail for three months and could have faced fines of $4,950 each, as well as losing their business licences.

Under Greek law, gambling is permitted only in licensed casinos - although illegal gambling is believed to be widespread.

The ban on games followed an unlicensed slot-machine scandal which damaged the governing socialists.

But it has been described as too vague, covering almost all games played in public places that profit from the devices.

Business concerns

Greece's gaming community has accused the government of taking the country back to the 1970s when individuals were arrested for playing cards at home.

Internet cafe owners have complained that the law could cause them to go out of business and have called for it to be repealed.

They say that the number of customers has dropped dramatically since the law was passed.

Computer usage in Greece is one of the lowest in the European Union.

But net cafes have been credited with helping expand the online culture.