The former Liverpool goalkeeper, Bruce Grobbelaar, faces humiliation and financial ruin after the Court of Appeal in London yesterday overturned a "perverse" u85,000 £85,000 (sterling) award of libel damages arising from allegations of match-fixing.

For the first time in English legal history, three appeal judges overturned a jury verdict in a libel action when they upheld a challenge by the Sun newspaper against a decision that the goalkeeper had been libelled by allegations of match-fixing, stripping him of his £85,000 award for damages. He now faces a bill for court costs of £1.2 million.

After the unprecedented ruling, an "astounded and absolutely devastated" Grobbelaar, who is currently living in Johannesburg, South Africa, insisted he had never fixed a football match and vowed that his legal team would launch a challenge against the decision in the House of Lords. "I have never done anything in football to taint the game", he told Sky News. "I have been through two criminal trials and one libel trial and most of the jurors were in my favour."

The Zimbabwean (43), famous for his acrobatic playing style, sued the Sun for libel two years ago after the newspaper alleged in a series of articles in 1994 that he took "massive bribes" from a Far Eastern betting syndicate to fix matches when he played for Liverpool and Southampton.

The Sun claimed that on one occasion Grobbelaar received £40,000 to make sure Liverpool lost 3-0 to Newcastle in a match in November 1993 and it based the allegations on a taped conversation in which the goalkeeper admitted taking bribes. Grobbelaar has always claimed that he went along with the conspiracy so that he could expose the betting racket.

The long journey through the courts began in 1997 at Winchester Crown Court when Grobbelaar faced criminal charges of match-fixing with three other defendants, the former Wimbledon players, John Fashanu and Hans Segers, and a Malaysian businessman, Heng Suan Lim. The first trial ended in deadlock and at the second trial the three men were cleared of corruption charges. After the trial Grobbelaar sued the Sun and a High Court jury found he had been defamed.

But in a devastating legal judgement yesterday, the appeal court said the jury's unanimous verdict at the High Court in 1999 represented "a miscarriage of justice which this court can and must correct."

After reviewing the evidence heard during the libel trial, Lord Justice Simon Brown described the jury's verdict as "an affront to justice," pointing out that from time to time a jury could return a "perverse" verdict.

The only rational view to adopt was that Grobbelaar had had taken money to fix matches "at least up to the standard of the balance of probabilities," and the entire account of his relationship with Mr Lim "beggars belief at every turn."

Upholding the Sun's appeal, Lord Justice Brown added: "He had, as it seems to me, just too much to explain away - his entire dealings with Mr Lim, his remarkable visits to Manchester and London, his large cash transactions at around the time of the Liverpool-Newcastle match, his confessions on tape . . . there are simply too many improbabilities piled one upon another inherent in Mr Grobbelaar's case for it to begin to be credible."

After yesterday's ruling, The Sun's editor, Mr David Yelland, said the decision "vindicated" the newspaper and represented "possibly the greatest day in the Sun's 30-year history." Outside the court, Daniel Taylor, solicitor for the publisher, News International, said the verdict confirmed the newspaper's belief that Grobbelaar was corrupt.

"He stands today condemned by three of the nation's most senior judges as a man who betrayed his team-mates, his fans and the national game," Taylor said.

But Grobbelaar's solicitor, David Hewitt, was adamant that his client's name would be cleared: "In our view, it is quite wrong for the Court of Appeal to substitute its findings for those of jurors who had the opportunity of hearing the evidence and evaluating the witnesses. This is not an end to the matter."

The FA yesterday stated it was urgently examining the court judgment. "The matter, not least its international consequences, will be raised at the first opportunity with FIFA."

After being cleared of match-fixing charges, Grobbelaar was found guilty of misconduct by the FA in September 1997 for breaking betting rules. He was given a suspended six-month ban and fined £10,000.