A new inquest will be held into the death of Bradley Stoke schoolboy Liam Hogan, after the High Court overturned a coroner's verdict that he was unlawfully killed by his father.

Six-year-old Liam was thrown to his death from a hotel balcony by his father John Hogan after a row with Liam's mother Natasha during a family holiday to Crete in 2006.

Hogan, 34, also plunged from the balcony, along with Liam's two-year-old sister Mia.

Both Hogan and Mia survived the 50ft fall from the fourth-floor of the Petra Mare Hotel at Ierapetra and Hogan was arrested.

In January last year a Greek court found him not guilty of Liam's murder after ruling that he had suffered from "an earthquake of insanity" at the time of the incident. He was ordered to be detained in a psychiatric unit

Two months later Avon Coroner Paul Forrest found that former tiler Hogan "unlawfully killed" Liam and there were calls for Hogan to face trial in Britain.

But at the High Court in London yesterday Sir Anthony May and Mrs Justice Dobbs quashed Mr Forrest's verdict after previously stating that the coroner's failure to consider the question of Hogan's mental state was a "really quite serious error of law".

The judges ordered that the case must go back "for further consideration".

Hogan's older sister Christine O'Connor, who lives in St George, had asked the court on her brother's behalf to overturn the unlawful killing verdict, on the grounds that he was "not in control of his actions" because of his psychotic state.

Her barrister James Badenoch QC called on the judges at an earlier hearing to substitute their own narrative verdict – with no reference to unlawful killing – for the coroner's, based on the evidence already available on how Liam met his death.

Mr Badenoch suggested that "no practical purpose or practical benefit" would come from "a further expensive, time-consuming and – for all concerned – further harrowing reinvestigation of these matters".

But the judges disagreed and said yesterday that a further hearing was necessary.

In a joint ruling, they said their role was to review the lawfulness of the coroner's decision – "not to substitute our own decision on potentially incomplete evidence".

The ruling has been welcomed by Hogan's ex-wife Natasha, who has since remarried and now lives in Australia with her daughter.

Her stepfather Brian Chandler said: "My stepdaughter, Natasha, and her family are pleased that the High Court has ruled that the inquest should be remitted to the coroner, rather than simply substituting a verdict of its own.

"We have been advised that this shows that the coroner's verdict of unlawful killing has not been ruled to be incorrect, merely that the process that the coroner used to arrive at his verdict was not legally correct.

"We understand that unlawful killing remains a verdict which will be open to the coroner to return after reconsideration. As the legal process is still continuing, with the possibility of a fresh inquest, we do not wish to make any further comment at this stage.

"Natasha and Mia are recovering well in Australia."

Mr Chandler said that while Hogan's family had received legal aid to fund their challenge to the coroner, Natasha had not and had instead been represented by a team from London lawyers Lovells and a barrister, all giving their time free of charge.

Hogan's solicitor Kerstin Scheel told the Post he was still undergoing psychiatric care in Greece but that his "ultimate position" was to return to England.

Ms Scheel added that she believed his mother was still living in Greece to be close to her son.

She said: "Mr Hogan and his family were legally advised that the coroner had applied the wrong legal test in reaching his verdict at the inquest into the death of Liam and believed that an error in a matter of such enormous importance should be corrected.

"The judges have ruled that the verdict should be quashed and referred back to the acting coroner for a new verdict to be considered.Mr Hogan and his family... respectfully request to be allowed to mourn the loss of Liam, continue healing and try to rebuild their lives in private."

The Director of Public Prosecutions has already indicated that Hogan would not face prosecution in this country in relation to Liam's death, should he return.

Mr Forrest, who is currently suspended in connection with an unrelated matter, is waiting to study the High Court judgement in detail before considering whether to comment.