Last week's decision follows a judgement from the European Court of Justice (ECJ) earlier this year which stated that EIAs can be required at the reserved matters stage of a planning application (Planning, 12 May, p1).
The case was brought by the Crystal Palace Campaign after Bromley gave planning permission for a cinema complex in Crystal Palace Park in 1999.
The council had relied on regulations from the former Department of the Environment, Transport and the Regions indicating that in a multi-stage process an EIA was only needed at outline stage.
But the ECJ ruled that even if the need for an EIA is not identified until the reserved matters stage it is still required for the whole project.
The law lords agreed with the ECJ and ordered the council to pay the costs of Dianne Barker, the local resident who took the case to court.
It will have to pay her High Court and Court of Appeal costs and half of her costs for the House of Lords and the ECJ proceedings. The government will have to pay the other half.
Bromley leader Stephen Carr said: "We are extremely angry. The judgement found that we had followed the clear UK government regulations relating to environmental impact assessments. Why then should Bromley taxpayers be penalised for something that the government got wrong?" The council has written to ministers to demand that they pay the legal costs, he added.
The case went through a dozen court hearings over almost eight years.
The final bills have not yet been calculated, but according to a council spokesman the total is likely to run to tens of thousands of pounds.
Although the DCLG published interim guidance for councils on the issue back in June, it will now have to formally embed the rulings in the EIA regulations.