"For all the organisations and campaigns that lobby and expect the Government to be straight with them, it's a very important precedent," said Guy Dehn, director of Public Concern at Work.
The DTI was forced to apologise for the "inherently misleading" way in which it engaged Public Concern at Work in a shambolic consultation process and for launching a High Court appeal it had no intention of pursuing.
The charity took the department to court five years ago over its attempts to keep confidential any whistle-blowing cases that were exposed during employment tribunals, arguing that all information should be made publicly available under the Public Interest Disclosure Act.
The High Court sided with Public Concern at Work, but this summer the department still succeeded in introducing regulations to retain secrecy.
The charity hailed the ombudsman's decision that the DTI should be forced to pay compensation as a rare and moral victory for the sector.
Richard Shepherd, the Conservative MP who brought the case to the ombudsman's attention, described the findings as "the most critical report I have read from the ombudsman in more than 20 years".