Denise Mullen and John McNeice were both granted leave to seek a judicial review of the failure to refer Garfield Beattie, 65, to the Parole Commissioners.
Mr Justice Colton ruled that they have established arguable cases against the Department of Justice.
Beattie, of Moss Road in Portadown, served 16 years behind bars on a life sentence for his part in three sectarian killings carried out by the so-called Glenanne gang, a notorious loyalist unit which operated at the height of the Troubles.
His victims included Denis Mullen, gunned down at his home near Moy, Co Tyrone in 1975, and Patrick McNeice, who was shot dead outside his Co Armagh home a year later.
In December last year he received a further 17-month term after being found guilty of attempting to intimidate Mr Mullen’s daughter Denise.
He sent her a letter signed by the East Tyrone Ulster Volunteer Force.
Following that development Ms Mullen and Patrick McNeice’s son, John, both pressed for Beattie’s life sentence licence to be revoked.
But earlier this year the Multi-Agency Risk Assessment Panel (MARAP) decided against ordering his recall.
The threshold for initiating his revocation was deemed not to have been met.
Lawyers for the two bereaved relatives claim the Department acted unlawfully and unreasonably by failing to refer Beattie’s case to the Parole Commissioners for an assessment of the risk he poses to the public.
They are seeking an order quashing the determination reached by MARAP.
Following submissions today Mr Justice Colton held that the challenges had passed the preliminary legal test.
He confirmed: “I will grant leave in respect of the decision of the Department of Justice not to refer the matter to the Parole Commissioners.”
The case will now proceed to a full hearing later this year.
Outside court Mr McNeice’s representative, Owen Winters of KRW Law, said: The lack of clarity in the process of deciding whether to revoke the life licence of terrorist offenders does a disservice to victims.”
Gavin Booth of Phoenix Law, representing Ms Mullen, said: “We welcome the decision to grant leave for our client and look forward to the full hearing.”