The court's ruling will allow asylum seekers who arrive on Christmas Island to challenge any rejection of refugee claims in Australian courts.
Under existing laws, asylum seekers who arrive in northern Australian waters are unable to appeal decisions by migration review tribunals.
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Immigration Minister Chris Bowen says a "significant" number of claims already in the system are likely to be affected.
"The potential for appeal is open to anybody who has their refugee claim rejected," he told ABC Television.
"At the moment we have about 150 people who have had that claim rejected at both levels of the process (and) about 1000 people in the system who've had their initial claim rejected."
The government would consider all options in the wake of the ruling, including introducing a "more robust" and "streamlined" asylum assessment process, he said.
"So that the chances of appeal for matters of procedural fairness are minimised."
Human Rights lawyer Julian Burnside QC says that - in theory - the ruling could also affect asylum seekers who have been deported back to their homeland.
"In theory yes, but in practice no," he explained on ABC Radio.
"It will be practically impossible for them to do anything about appealing once they've been sent back (to Afghanistan) and live in fear of the Taliban," he said.
Mr Burnside says creating a more robust and fair system of appeal will not overload the courts with claims.
"It will probably very quickly reduce the number of appeals, he said, adding that there was also a strong case to close the Christmas Island detention facility.
"It costs about 10 times as much, per person, to hold people and process them on Christmas Island than it does to have them on the mainland."
The Australian Greens want Christmas Island put back in Australia's migration zone and say they will introduce legislation to parliament allowing for the change.
Greens senator Christine Milne says Australians were angry when the then Howard government changed the migration zones "for a cynical political purpose".
"That's why it's necessary," she told ABC Radio on Friday, referring to the legislation.
