Jess Varnish has been told by the court that she can pursue a legal claim against British Cycling and UK Sport for unfair dismissal, sexual discrimination, detriment from whistleblowing and victimisation.
The former Great Britain track sprinter was ejected from the national squad in April 2016 on the basis that her performance was not at the level expected by the squad. It meant that she could not take part in the 2016 Olympic Games in Rio.
As Cycling Weekly has previously reported, Varnish is intending to sue the organisations for compensation for lost income, claiming that her dismissal from the squad was not handled correctly.
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Varnish claimed that she had been subjected to discrimination and had been told by former technical director Shane Sutton to "go and have a baby". Sutton resigned from his post in April 2016 and denies the allegations.
UK Sport had attempted to have Varnish's case dismissed, but a court hearing on Monday reportedly saw a judge rule that Varnish can continue her legal claim at an employment tribunal on the basis that she was employed by British Cycling and UK Sport, and has employee rights.
If Varnish now pursues with legal action and her claim is successful, there will be a major shake-up in the way that UK Sport-funded athletes are perceived.
They would be treated as employees, and therefore entitled to a pension and have their funding taxed at 20 per cent.
It would also potentially open the way for other athletes to take legal action against British Cycling and UK Sport, and make it difficult for riders to be dropped from the national programme.
In September, a spokesperson from British Cycling told Cycling Weekly: "We are in dialogue with Jess, discussions have been positive and constructive and we look forward to reaching a resolution which all parties will regard as equitable".
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A source close to Varnish told the BBC that: "She's not doing this for money. She's frustrated that neither UK Sport nor British Cycling have changed the grey situation that athletes still remain in.
"Athletes still have no real rights, no pensions, no grievance and whistleblower procedures, and no course of action, outside of civil action. There are some really deep-rooted issues which she's passionate about."
It is still possible that Varnish's claim could be settled out of court, although if Varnish is seeking a change in the way that athletes are treated rather than for financial compensation, then this seems unlikely.
